EUR/USD bounces-back towards 1.1540


  • US dollar weakness, widening German-Italian yield spread aids the EUR/USD rebound.
  • Focus shifts to Eurozone PMIs and FOMC minutes amid a data-dry calendar today.

The EUR/USD pair faced rejection once again near 1.1540 levels and reversed from weekly tops to test the 1.15 handle before running into fresh buyers ahead of the last.

At the press time, the spot is seen extending its tepid bounce near 1.1525, as the US dollar continues to gyrate near one-week troughs of 96.46, with Trump’s Fed criticism still weighing down on the buck.

Despite the latest leg higher, it remains to be seen if the spot can take out the key resistance located near 1.1540 region. According to the technical confluence indicator, “the pair has resistance at around 1.1545 where we see the congestion of the Pivot Point one-week R2, the one-hour high, the four-hour high, the PP one-day R2, and the Bolinger Band 15m-Upper. This could limit any upside,” FXStreet’s Analyst Yohay Elam notes.

In the day, the EUR bulls could gain further momentum on the back of widening German-Italy 10-year yield spread, as Italy political worries resurface. However, the USD dynamics will continue to remain the key driver amid a lack of fresh fundamental catalysts, as the focus shifts to the FOMC minutes due tomorrow.

EUR/USD Technical Levels

Slobodan Drvenica at Windsor Brokers, notes: “Monday's close above pivots at 1.1454 (10SMA) and 1.1470 (Fibo 38.2% of 1.1745/1.1302 descend) confirmed Doji reversal pattern on daily chart and generated a bullish signal for recovery extension. Fresh bulls faced so far strong headwinds at 1.1445 resistance zone and may hold in extended consolidation before fresh attempts higher, with overbought slow stochastic supporting scenario. Extended dips should be contained above broken 10SMA to keep near-term bulls in play for the renewed attack at 20SMA / weekly cloud base pivotal barriers. Break and close above 20SMA would be bullish signal for recovery extension towards 1.1575/83 (Fibo 61.8% / falling 30SMA) and 1.1627 (55SMA).” 

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