EUR/USD: gathers itself around 1.1650 after a bearish open

After closing at 1.1665 in a choppy NY session, EUR/USD has started out the week bearishly on dollar strength, dropping to lows of 1.1644 so far. 

EUR/USD traded in a chop in Friday's closing US session having entered the room in the London handover at 1.1640 from a short squeeze in European trade. NY desks bid the single currency up to 1.1680 before US yields sharpened, widening the DE/US spread making for 1.1650 as the day progressed in NY trade. 

• Dollar's downside may remain open - BBH

Fundamentally, however, it was still all about the US tax reform. Markets pressed on with the gloom and doom around what the different version of the tax-reform bill presented by the GOP Senate and what the delays until 2019 would mean for the dollar and US economy. Subsequently, there was a slide in US stocks, extending the beginnings of what could be a correction of the ongoing bull market where we have seen somewhere in the region of 20%+  priced in on to US stocks based on Trump's reform plans for the economy. 

• Wall Street closes marginally lower as tax plan uncertainty weighs on sentiment

Meanwhile, for the week ahead, Nomura offered their outlook that includes, not only US CPI inflation expected to rise back to its trend-like pace in October, but also GermanQ3 GDP and Oct inflation:

• Key events for the week ahead - Nomura

EUR/USD levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that this latest advance of the common currency seems barely corrective:

"In the daily chart, the pair stalled its advance after failing to surpass a bearish 20 DMA, which daily basis has widened the distance with the 100 DMA. Indicators in the mentioned time frame corrected overbought conditions, but lost their strength upward well below their mid-lines, now turning lower, indicating that further technical confirmations are required to see the pair advancing."

Shorter-term technicals:

"In the 4 hours chart, the 20 SMA heads higher below the current level, but the pair met selling interest around a bearish 100 SMA. The RSI indicator has begun easing after reaching overbought readings, but the Momentum maintains its bullish slope, suggesting further advances are likely. The pair is trading at the key 1.1660 region, with an immediate resistance at 1.1690, where it topped earlier this month. A steadier recovery beyond this last should keep the pair on the bullish side, at least short-term," Valeria noted.