EUR/USD rebounds to test 1.1150 as Greek worries recede

Dhwani Mehta FXStreet

The shared currency stalled its downslide against the US dollar in early Europe, with the EUR/USD pair now on a recovery mode in an attempt to regain 1.1150 barrier.

EUR/USD: 5-DMA at 1.1176 back on sight

The spot reversed course from two-week troughs and recovered almost half the sell-off triggered by reports of Greece threatening to opt out of next payment without a debt deal if creditors cannot agree on debt relief.

The latest leg up in the major can be mainly attributed to the Greek government spokesman Tzanakopoulos comments, denying reports that Greece is considering rejecting the debt relief tranche offered by its creditors.

Moreover, a turnaround in risk condition, with risk-on back in vogue, prompted a solid comeback in the EUR/JPY cross as the Yen sellers returned to markets. Hence, EUR/JPY driven recovery also pushed the EUR/USD pair back towards the mid-point of 1.11 handle.

All eyes now remain on the German prelim CPI, which is expected to show consumer prices decelerating in the month of May, aggravating ECB President Draghi’s concerns on inflation. Meanwhile, the spot may also take fresh cues from the US Core PCE price index, personal spending and consumer confidence numbers lined up for release later in the American session.

EUR/USD Technical Levels

Slobodan Drvenica at Windsor Brokers Ltd notes: “The pair is trading in red for the fourth consecutive day and hit session low just ahead of 1.1100 support (Fibo 38.2% of 1.0839/1.1268 upleg), which marks the trigger for further weakness. Break below 1.1100 handle could accelerate through 1.1060 (base of thick 4-hr cloud, reinforced by rising 20SMA) and may extend towards psychological 1.1000 support (also Fibo 61.8% of 1.0839/1.1268).”

“Daily RSI reversed from overbought territory and shows a plenty of room at the downside, however, oversold slow stochastic suggests bears may pause, but so far lacking firmer signal as the indicator is still heading south,” Slobodan adds.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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