- Bounces on fresh DXY selling.
- Back above 50-DMA barriers at 1.1750.
- Eurozone final CPI, US tax reforms in focus.
Fresh bids emerged for the EUR/USD pair near 1.1740 levels in early trades, which prompted a bounce back above the 50-DMA support-turned-resistance at 1.1750, as the bulls fight back control kicking-off a brand new week.
EUR/USD: Will it sustain the bounce?
Amidst broad-based US dollar weakness ahead of the US tax reform votes, the main currency pair caught a fresh bid and paused its two consecutive days of declines, now making headways towards the 1.18 handle ahead of the Eurozone final CPI figures due later in the European session. The Eurozone final CPI is expected to confirm a 1.5% reading, the seen in the prelim release.
The Euro also continues to derive some support from the upward revisions made to its growth projections by the ECB last week, while solid Eurozone fundamentals, including a raft of solid manufacturing PMI reports, also helps underpin the sentiment around the spot.
More so, Friday’s US CFTC commitment of traders’ report that showed the EUR net longs increased to the highest levels since May 2007, also lifts the sentiment around the common currency so far this session. The EUR longs increased in the current week to 114K - a change of 21k.
Looking ahead, it remains to be seen whether the major can sustain the latest upmove, in the wake of the US political developments surrounding the tax reforms and ahead of the key US macro news, including the final GDP and durable goods data.
EUR/USD Technical Outlook
Valeria Bednarik, Chief Analyst at FXStreet, explains: “Shorter term, and according to the 4 hours chart, the risk has also turned toward the downside, as the pair settled below all of its moving averages, while the Momentum indicator entered bearish territory as the RSI indicator heads south around 42. The pair has a major support around 1.1715, where it bottomed twice in the last four weeks. Support levels: 1.1715 1.1660 1.1620. Resistance levels: 1.1770 1.1830 1.1870.”
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