EUR/USD breaks higher to test 1.1850, US data in focus

  • DXY hits fresh monthly lows sub-93.50.
  • Risk-off, ECB Hansson’s comments underpin.
  • Focus shifts to the US CPI and retail sales data.

The EUR/USD pair caught a fresh bid-wave on the European open and rallied nearly 50-pips to print fresh four-week tops of 1.1834, as the US dollar extended its sell-off against its main peers

EUR/USD looks to regain 1.1850 barrier

The spot finally broke higher from the Asian bullish consolidative mode and rebounded to test Oct 26th low of 1.1838 in Europe, as the bulls found fresh impetus from fresh USD selling seen across the board after Treasury yields ran through fresh supply amid renewed risk-aversion wave fuelled by negative European equities.

The USD index drops -0.28% to flirt with four-week lows of 93.43, while the 10-year Treasury yields move further away from the key 2.40% to now trade around 2.34%, down -1.65% so far.

Moreover, persisting risk-off trade also continue to boost the sentiment around the funding currency Euro, while the Eurozone growth story, in the wake of upbeat German and Eurozone GDP numbers, helps keep the EUR bulls in command.

The latest leg higher in the major can be also attributed to the comments from the ECB policymaker Hansson after he said that the short-term economic risks remain to the upside.

The pair now looks forward to the US CPI and retail sales data for the fresh incentives on the US dollar, which is weighed down by uncertainty over the US tax reforms and increased worries over the falling inflation expectations in the US.

EUR/USD Technical Levels

Karen Jones, Analyst at Commerzbank, noted: “EUR/USD correction higher is gaining traction. It has already reached the 55-day ma at 1.1796 and there is scope for 61.8% retracement at 1.1886. Here it should struggle – the negative bias will remain intact while capped by 1.1886, beyond here it neutralizes. We will maintain our downside target of the 200-day ma at 1.1304 for now but ackno3wledge that this is looking less likely. Near-term dips are indicated to terminate circa 1.1765/40.” 

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