The greenback continues to weaken against its major counterpart, with the key US Dollar Index sinking to seven-month lows near the 96.00 handle during Asian session on Wednesday. The buck was being pressured by Tuesday's sharp upsurge in the Euro after the ECB President Mario Draghi sounded less dovish and also hinted towards a possible monetary policy tweak in the near-future.
The dollar was also being weighed down by a delay of the health-care bill vote by the US Senate and raised concerns over Trump administration's ability to push through pro-growth economic policies, like tax reform and infrastructure spending. The USD bulls failed to gain any respite from the Fed Chair Janet Yellen's comments that rate-increase would be gradual and the central bank would avoid destabilizing the markets.
Today's key focus would be comments from various central bank chiefs, namely - BOC Governor Stephen Poloz, ECB President Mario Draghi, BOE Governor Mark Carney and BOJ Governor Haruhiko Kuroda, due to participate in a panel discussion at the European Central Bank Forum on Wednesday.
Technical outlook
The pair has managed to clear its immediate strong hurdle near 1.2815-20 region, marking 50% Fibonacci retracement level of 1.3048-1.2589 recent downfall, negating any near-term bearish bias. Hence, the pair now seems more likely to extend the upward trajectory further towards 61.8% Fibonacci retracement level resistance near 1.2875-80 region. A convincing break through the said resistance has the potential to continue boosting the pair further towards its next resistance near 1.2955-60 horizontal area.
On the flip side, any retracement back below the 1.2800 handle might now be limited and is likely to find strong buying interest near 38.2% Fibonacci retracement level support around 1.2765-60 region. Weakness below the mentioned support would turn the pair vulnerable to head back towards retesting the 1.2700 handle, also coinciding with 23.6% Fibonacci retracement level, with some intermediate support near 1.2730-25 area.
The pair broke through Nov. 2016 swing high and jumped to 10-month highs beyond the 1.1300 handle. With short-term technical indicators still far from being in overbought territory, the ongoing strong bullish momentum seems strong enough to continue boosting the pair further towards 1.1385 intermediate resistance ahead of the 1.1400 handle and June 2016 highs resistance near 1.1420 level.
On the flip side, any profit taking slide now seems to find immediate support at the previous strong resistance near 1.1295 region. Sustained weakness below the 1.1300 handle might trigger a corrective slide back towards 1.1220 horizontal level and any subsequent retracement now seems to be limited by a strong support near the 1.1200 round figure mark.
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