• Surging US bond yields lend eases USD bearish pressure.
• Traders opted to book profits near 3-year tops.
• Investors turn cautious ahead of next week’s ECB meeting.
The EUR/USD pair stalled its steady up-move just ahead of the 1.2300 handle and has now retreated around 30-40 pips from session tops.
Currently trading around the 1.2260 region, the latest leg of retracement lacked any fundamental trigger and hence, could be solely attributed to a modest greenback rebound.
Despite looming fears of a possible US government shutdown, the ongoing upsurge in the US Treasury bond yields and technically oversold picture helped the key US Dollar Index to once again find some support near the 90.00 handle.
Against the backdrop of the recent jawboning by several ECB officials, some long-unwinding pressure also seems to have collaborated to the pair's modest retracement from closer to 3-year tops.
Moreover, traders might be reluctant to place any aggressive bets and preferred to wait for the next fundamental trigger - the ECB monetary policy meeting, due next week.
Nevertheless, the pair still seems set to end the week on a high note and post fifth consecutive week of gains as traders now look forward to the release of Prelim UoM Consumer Sentiment from the US and Fedspeaks for some short-term opportunities.
Technical levels to watch
A follow-through retracement below mid-1.2200s could get extended towards 1.2225 intermediate support en-route the 1.2200 handle. On the upside, the 1.2285-95 region now seems to have emerged as an immediate hurdle, above which the pair seems to dart towards multi-year highs resistance near the 1.2320-25 region.
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