EUR/USD: Corrective slide to resume below 1.1950?

The EUR/USD pair staged a brief recovery from a dip to 1.1958 levels, although remained confined within the familiar 20-pips, as investors await fresh trading impetus for the next direction.

EUR/USD holds well below daily pivot

The spot remains better bid so far this Tuesday, now looking to take on the recovery towards the 1.20 handle, as the US dollar witnesses fresh selling across its major rivals amid subdued Treasury yields and mixed Fedpseaks.  The USD index drops -0.12% to daily lows of 91.96, extending the retreat from five- day tops of 92.13.

Fed's Williams noted overnight that the price-level targeting has benefits while painting a benign picture of Fed rate hikes while Fed's Bostic said that the Fed should be cautious if yield curve continues to flatten, adding that three rate hikes in 2018 may be too much. Fed’s Rosengren said, “optimal rate of inflation may move around just as does the natural rate of unemployment”.

Moreover, the selling in the greenback across the board is also driven by the USD/JPY sell-off, after the Yen rallied hard on the reports that the BoJ reduced the JGBs purchases for today. However, it remains to be seen if the major can sustain the minor-recovery mode, as markets believe that the extension of the correction in the EUR is imminent, given its recent rally to near its 2017 peak of 1.2092.

Also, downbeat German factory orders data could continue to weigh on the common currency, as attention now shifts towards the German industrial production and trade data due on the cards ahead of the European open.  Markets also look forward to the second-liner employment data from both continents for further momentum on the prices.

EUR/USD Technical Levels

FXStreet’s Chief Analyst, Valeria Bednarik notes: “According to technical readings in the 4 hours chart, the decline could continue given that the price is well below a now bearish 20 SMA, whilst technical indicators maintain their strong bearish slopes near oversold territory. The slide seems so far corrective and could continue to be so even if the pair falls down to 1.1920, the 50% retracement of the same decline, although a break below this last will put an interim top in place, and imply a downward continuation toward the 1.1660 price zone. Support levels: 1.1955 1.1920 1.1880. Resistance levels: 1.2000 1.12030 1.2065.”