EUR/USD extends the bounce, eyes on 1.1880 ahead of US ADP

DXY drops on Govt shutdown fears, Fedspeak.
Risk-aversion, EUR/GBP flows underpin.
Awaits the German factory orders, EZ retail PMI & US ADP.

Dhwani Mehta FXStreet

The recovery attempts in the EUR/USD pair from nine-day troughs finally surpassed the stiff resistances located near 1.1830, the confluence zone of daily pivot and 20-DMA, with the rates now heading for a test of 1.1850 levels.

The sentiment around the main currency pair remains lifted amid a broadly weaker US dollar, as markets weigh in the chances of a US government shutdown, in the wake of the government funding to expire this Friday.

Additionally, Chicago Fed President Evans anxiousness to hike rates in December also aggravated the pain in the buck. The USD index extends the overnight losses and hit fresh daily lows of 93.16, down -0.12% on the day.

Also, moderate risk-aversion persisting in the markets amid the latest North Korea headlines and resultant fall in the Asian equities offers some support to the funding currency Euro.

Meanwhile, the cross-driven strength also continues to boost EUR/USD, as the EUR/GBP cross benefits from ongoing weakness in Cable on the back of the renewed political tensions surrounding the UK economy.

Later today, the pair will get influenced by the releases of the German factory orders, Eurozone retail PMI and US ADP employment data.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, writes: “The technical picture is any way bearish short-term, as in the 4 hours chart, the pair extended its decline below its 20 SMA, which continued capping the upside around 1.1870/80, whilst technical indicators remain within the bearish territory, with the RSI heading south at 39. Furthermore, the pair is currently struggling with its 100 SMA, first time around the indicator since November 13th. Support levels: 1.1805 1.1760 1.1725. Resistance levels: 1.1835 1.1880 1.1930.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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