EUR/USD flirts with 2-week tops near 1.1880, EZ data, Draghi eyed

The bid tone around the EUR/USD pair remains intact in the early European trading, keeping the rates hovering in close proximity to two-week tops of 1.1879.

EUR/USD: Will it regain 1.1900 ahead of Draghi?

The bulls appear to take a breather after the steady Asian rise, as the spot awaits the reaction to the dovish Fed minutes from the European desks for the next push higher. Meanwhile, the USD index continues to extend the declines to now refresh two-week troughs at 92.66.

The sentiment around the greenback remains weighed down by dovish FOMC minutes, which showed the Fed members remain concerned over the inflation outlook, as a majority of them consider the inflationary factors as not just being transitory. Dampened inflation prospects weighted on the odds of a Dec rate hike, with the CME FedWatch Tool showing that the chances of a rate hike this Dec have eased below 90% post-Fed minutes.

Meanwhile, the Euro continues to derive support from easing Catalan fears, after the Spanish PM Rajoy offered five days to the Catalonia’s leader Puigdemont to explain whether his ambiguous statement on secession was a formal declaration of independence.

Looking ahead, the major awaits the Eurozone industrial production data ahead of the speech by the ECB Chief Draghi and US PPI data.

EUR/USD Technical View

Haresh Menghani, Analyst at FXStreet wrote: “…the pair runs the risk of correcting back towards the trend-channel support near the 1.1835-30 region, also nearing 38.2% Fibonacci retracement level. A convincing drop below the mentioned support would invalidated the up-move and turn the pair vulnerable to break below the 1.1800 handle and head towards testing 23.6% Fibonacci retracement level support near 1.1770 area.”

“Alternatively, a clear break through 1.1880-85 barrier would indicate a fresh bullish break out and could lift the pair beyond the 1.1900 handle towards its next major resistance around 1.1940 horizontal level,” Haresh adds.