EUR/USD consolidated just below 23-month highs, around mid-1.1600s

The EUR/USD pair trimmed some of its daily gains and retreated around 20-pips from post-German IFO swing highs near the 1.1670 region.

Demand for the shared currency picked up pace after the German IFO survey showed strong business confidence and reflected strong momentum in the Euro-zone economy. In fact, business expectations, current assessment and business climate all bettered expectations and came-in at 107.3, 125.4 and 116.0, respectively, for the month of July.

However, a sharp recovery in the US Treasury bond yields, which helped the key US Dollar Index to recover early lost ground to fresh yearly lows, capped further up-move below 23-month highs near 1.1680-85 region.

Meanwhile, the pair's two-way price action since the beginning of this week has been pointing to consolidation phase as investors refrained from placing aggressive bets ahead of the next big event risk - FOMC monetary policy decision, due to be announced during NY trading session on Wednesday.

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In the meantime, today's release of CB Consumer Confidence Index from the US is unlikely to act as a game changer but would still be looked upon for some short-term trading impetus during early NA session.

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Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "From a technical point of view, the pair continues consolidating near its yearly high of 1.1683, bullish in the wider view, but neutral short-term, given that in the 4 hours chart, technical indicators turned lower within positive territory, with the Momentum pressuring its mid-line. In the same chart, a bullish 20 SMA continues leading the way higher, offering an immediate support at 1.1640. A more relevant downward corrective movement could come on a break below 1.1580, the next big support, but quite unlikely for today."

"To the upside, the pair has to extend beyond the mentioned yearly high of 1.1683, to be able to extend its gains up to 1.1713 first, the high for 2015, en route to the 1.1740/50 price zone" she added.