- EUR/USD is yet to take out the H&S neckline hurdle.
- Further flattening of the treasury yield curve could help EUR/USD rally to 1.1750 levels.
The EUR/USD pair was well bid in Asia on the back of broad based USD selling, but still failed to cut through the head and shoulders neckline hurdle of 1.1671.
The key technical hurdle may fall in Europe/US if the treasury yield curve (spread between the 10-year yield and the 2-year yield) continues to narrow. As of now, the spread 75 basis points (bps). A drop below the Oct. low of 74.80 bps may yield another leg lower in the US dollar.
EUR/USD may also find bids via a potential EUR/GBP rally following a (potential) dovish rate hike by the BOE.
As discussed here, the EUR/USD Nov. expiry options data published by the CME shows that the investors have positioned for a corrective rally above 1.1750-1.18 handle.
However, the USD is still seen rallying on Powell-led Fed and tax reform talk. Kathy Lien from BK Asset Management wires, " Many sources are also saying that Jerome Powell will be President Trump's pick for Fed Chair. As the market has fully discounted a Yellen departure, as long as Trump picks Powell or Taylor and not someone from left field, the dollar will rise as the uncertainty recedes. The announcement is expected on Thursday along with the Republicans' tax reform bill, which was delayed from today. Unless there are any unexpected surprises on either front, the dollar should rise on these announcements."
EUR/USD Technical Levels
FXStreet Chief Analyst Valeria Bednarik writes - "Technically, the pair is gaining bearish strength short-term, as it is closing the day below the 1.1630 price zone, where it has the 23.6% retracement of its latest daily decline, and its 20 SMA in the 4 hours chart. Technical indicators in the mentioned time frame head lower within bearish territory, with the price now posed to test October low of 1.1575, below the level, there's little in the way towards 1.1460, the strong static resistance that capped advances all through 2015 and 2016. Nevertheless, further dollar's gains will depend on how the market takes Trump's announcement."
Support levels: 1.1575 1.1540 1.1500
Resistance levels: 1.1670 1.1700 1.1745
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.