EUR/USD fails to break 1.1490 and retreats

EUR/USD is trading around 1.1470 after being unable to break above last week highs. The pair peaked at 1.1486, the highest since Wednesday. The euro failed to rise above 1.1490 (2017 highs) and pulled back modestly. 

Upside pressure remain highs 

The bullish momentum remains strong for the pair and another test of 1.1490 could be seen over the next hours. “The pair is trapped within a strong resistance region between 1.1460 and 1.1490, and would take a clear break above this last to confirm further gains ahead”, said Valeria Bednarik, Chief Analysts at FXStreet. 

A decline under 1.1460, where the 20-hour moving average currently stand, could open the doors to a correction toward daily lows located at 1.1435. 

Weak US data, the main driver ahead of ECB

The US dollar remains weak in the market. The Dollar Index reached a fresh multi-month low while US yield bonds continue to slide. The move started on Friday, after retail sales and inflation data from the US. Today, the Empire State Manufacturing Index fell to 9.8 for July from 19.8, on another report below expectations. 

Earlier, Eurozone inflation data showed a reading slightly above expectations but did not affect the euro. The key event of the week will be on Thursday: the European Central Bank meeting. No change in polity is expected but traders will look for clues about the outlook for QE. 

We expect July to bring no changes in actual ECB policy - Rabobank

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