EUR/USD off-lows, re-takes 1.2400 ahead of US GDP

The EUR/USD pair stalled its Asian recovery mode near 1.2420 levels and came under heavy selling pressure on the European open, as the bears eyed a break below the 1.2375 support area. However, fresh buyers emerged near the last, prompting a quick recovery in the spot, in a bid to regain the 1.24 handle.

The sharp declines in the major were partly fuelled by broad-based US dollar strength, a\s easing worries over the US-China trade war combined with the North Korean leader Kim’s upbeat comments lifted the sentiment around the buck.

Moreover, rising concerns over declining inflationary pressures in the Euro area also collaborated to the renewed weakness in the EUR while falling German 10-year bond yields were also seen as one of the main catalysts behind the declines to 1.2377 lows. The 10-year German bund yields trade at the lowest levels in two months at 0.473%, losing -4.60% on the day.

Focus now shift towards the US Q4 final GDP data due later in the NA session, with the greenback likely to receive an additional boost on an upward revision. In the meantime, the broader market sentiment and the price-action around the German yields will continue to drive the EUR moves.

EUR/USD levels to watch

FXStreet’s Analyst Haresh Menghani notes, “From a technical perspective, the near-term bullish outlook remains and is further reinforced by the reemergence of dip demand below the 1.2400 handle. Moreover, the recent break through a descending trend-line hurdle further adds credence to positive bias and hence, the pair seems poised to make a fresh attempt towards reclaiming the key 1.2500 psychological mark.”

“On the flip side, any follow-through retracement is likely to find fresh buying interest at the descending trend-line resistance break-point, now turned support, currently near the 1.2340-35 region,” Haresh adds.