EUR/USD refreshes 4-week tops near 1.1910, what’s next?

The EUR/USD pair staged a solid comeback in the Asian trades, having bounced-off the daily pivot located at 1.1885 levels in a bid to regain the 1.1900 mark.

EUR/USD trades above all major DMAs

Markets seem to be adopting the ‘Buy the dips’ strategy in the spot, paving way for further upside momentum, with the next 1.1940/45 target in sight. Investors remain optimistic over the Eurozone growth outlook in 2018, especially after the ECB substantially revised the Eurozone growth estimates to the upside.

Moreover, the major also takes advantage of the ongoing weakness seen in the US dollar across its main competitors, in the wake of a retreat in the US 10-year Treasury yields from nine-month tops of 2.504% reached last week.

Kathy Lien at BK Asset Management wrote: “Although this morning's U.S. economic reports were weaker, with consumer confidence falling sharply and pending home sales growth slowing, the decline in the greenback began well before the data was released.  The catalyst was U.S. yields, which started the day lower, sapping the hope for an end of year dollar rally.  Though the selloff in the dollar today was modest given the nearly 6bp drop in 10-year yields. “  

The pair now awaits the ECB Bulletin and the last set of relevant macro news from the US docket for this year while light trading will continue to persist ahead of the New Year holiday break.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, noted: “In the 4 hours chart, the price remains above all of its moving averages, albeit the 200 SMA advances faster than the 100 SMA, both now converging around 1.1810, a clear sign of limited momentum upward. In the same chart, the RSI indicator consolidates around 65, while the Momentum indicator keeps heading higher at 1-week high, all of which indicates a possible test of December high of 1.1940, en route to 1.2000. Support levels: 1.1855 1.1830 1.1800. Resistance levels: 1.1940 1.1975 1.2000.”