EUR/USD up little, around mid-1.1600s amid subdued trading action

   •  Easing German political risk prompts some short-covering.
   •  A modest USD retracement provides an additional boost.

The EUR/USD pair held on its modest daily gains through the early North-American session, albeit struggled to build on the positive momentum. 

The latest German political risk eased after the German Chancellor Angela Merkel reached a deal on immigration policy with her coalition partners and prompted a short-covering move around the shared currency. 

The pair touched an intraday high level of 1.1673 but seemed lacking any strong follow-through traction as bulls seemed unimpressed by today's mixed Euro-zone economic releases - flat monthly retail sales data and hotter-than-expected PPI print.

However, a weaker tone around the US Dollar, despite a goodish pickup in the US Treasury bond yields, helped limit any immediate downside and assisted the pair to hold with a mild positive bias around mid-1.1600s.

It would now be interesting to see if the pair is able to build on overnight recovery move from sub-1.1600 level or remains confined in a narrow trading range amid relatively thin US economic docket, featuring the release of factory orders data.

Technical levels to watch

Any subsequent up-move is likely to confront fresh supply near the 1.1690-1.1700 region and is followed by 1.1720 supply zone, above which the pair is likely to aim towards reclaiming the 1.1800 handle.

On the flip side, weakness back below the 1.1600 mark is likely to accelerate the fall towards 1.1550 intermediate zone before the pair eventually drops to challenge the key 1.1510-1.1500 important support.