EUR/USD catches fresh bids, looks to 1.1700 ahead Eurozone PMIs

The EUR/USD pair stalled its Asian retreat and caught and caught a fresh bid-wave in early Europe, as the bulls now look to retest the 1.17 handle amid persisting broad-based US dollar weakness.

EUR/USD: Thin-trading likely to exaggerate US dollar moves.

The spot is seen extending its renewed uptick, as the European traders hit their desks and react to the Financial Times (FT) report that the European Union (EU) is s considering talks on a tariff-cutting deal between the world’s big car exporters to prevent an all-out trade war with the US.

More so, the US dollar continues to remain on the back foot across its main peers, in response to the People’s Bank of China’s (PBOC) warning to soothe the markets. The PBOC Governor Yi Gang noted that the central bank was closely watching fluctuations in the foreign exchange market and would seek to keep the Yuan at a stable and reasonable level.

Looking ahead, the pair eagerly awaits the Euro area services PMI reports that will start trickling in from 0715 GMT for fresh trading impetus while USD dynamics will dominate amid slowing volumes and irregular volatility. The US markets remain closed today on account of Independence Day.

EUR/USD Technical Levels:

Karen Jones, Analyst at Commerzbank, notes: “EUR/USD continues to probe the 1.1671 short-term downtrend, and while this holds attention is still on the 1.1510/08 supports (recent lows). Initial resistances are the 1.1671/1.1723 resistance line, Fibo and minor high. Medium to longer term we continue to target the 200-week ma at 1.1394. We would expect this to hold the initial test and provoke some profit taking. Below 1.1394 would introduce scope to the 61.8% retracement at 1.1186. Above 1.1671/1.1723 is needed for another shot at the June high at 1.1853/55. Currently, risks are evenly balanced. Above 1.1855 we look for a deeper retracement to the 1.1914 55 week ma.”