The US Dollar came under some renewed selling pressure and witnessed a weekly bearish gap opening on Monday in wake of the US President Donald Trump's executive order on Friday, imposing a 90-day ban on travelers from seven Islamic countries.

Trump's focus on protectionism, coupled with lack of clarity on the economic policy front, added on to Friday’s disappointing US economic data and failed to justify the currency's recent advance. The US economic data released on Friday showed fourth-quarter growth slowed to 1.9%, while orders for durable goods orders contracted for the second straight month in December. Dismal US economic data helped the GBP/USD major to defend 100-day SMA and stalled the EUR/USD pair selling pressure near mid-1.0600s support area.

Both the major held on to their gains but remained within familiar trading range as investors look forward to this week major central bank decisions and a slew of top-tier economic data flow, scheduled at the beginning of a new month.

In absence of any major economic releases during European session on Monday, traders would take cues from the US economic docket that features the Fed's preferred inflation gauge - Core PCE Price Index, which would be accompanied by the release of Personal Income / Spending data and followed by Pending Home Sales for the month of December.


Technical outlook



The pair rebounded from an important confluence support near 1.2515-10 region, comprising of 100-day SMA and 23.6% Fibonacci retracement level of its recent recovery move from 1.1987 to 1.2673. Hence, a follow through buying interest above 1.2600 handle should boost the pair towards 1.2630 horizontal resistance above which a fresh wave of up-move is more likely to lift it beyond six-week highs resistance near 1.2570-75 region towards reclaiming 1.2700 handle, en-route 1.2735-40 hurdle.

Conversely, failure to clear 1.2600 handle resistance and a subsequent drop back below 1.2550 level is likely to drag the pair back towards 1.2515-10 confluence support. A convincing break below 1.2500 psychological mark would turn the pair vulnerable to head back towards 50-day SMA support near 1.2420 region, also coinciding with 38.2% Fibonacci retracement level.



Bullish short-term technical indicators has been supportive of the pair’s rebound from mid-1.0600s horizontal level and defend 23.6% Fibonacci retracement level of 1.0341-1.0773 recent up-move. However, any further up-move beyond 1.0750 immediate barrier might continue to confront resistance near 1.0765-70 region and only a decisive move above this strong hurdle would increase prospects of any further near-term recovery for the major. On a sustained move above 1.0770 resistance, the pair seems all set to clear 1.0800 handle and head towards testing 100-day SMA resistance near 1.0820 region.

On the flip side, 1.0700 handle now becomes immediate support to defend, which if broken is likely to drag the pair back towards 1.0660-50 horizontal support. A decisive weakness below this strong support seems to open room for continuation of the pair’s corrective slide towards 38.2 Fibonacci retracement level support near 1.0600 round figure mark and eventually towards 50-day SMA support near 1.0585 region.

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