EUR/USD: Recovery remains capped by 1.1800 on Draghi’s speech
- DXY, USTs extend its rebound into Europe.
- Unimpressed by Draghi’s optimism on the economy.
- Downside still cushioned on mixed European equities.
- Attention now turns to the US housing data.
The EUR/USD pair
EUR/USD: Will the bulls retain control above 1.1800?
The spot failed to chew the offers placed near 1.1820 levels and dropped sharply lower to print fresh session lows of 1.1784 levels, before attempting a minor-recovery over the last hour. However, the recovery quickly ran into 1.1800 resistance on the back of a steady rebound staged by the USD, following the Asian sell-off. The USD index now prints fresh session tops at 93.68, reversing a dip to 93.42 levels.
Moreover, the EUR bulls remain unimpressed by Draghi’s speech, as he reiterated that he remains confident on the Eurozone economic recovery momentum, keeping a lid on the EUR/USD recovery. The stalled recovery in the major can be also attributed to the ongoing German coalition talks that may be extended well into Saturday.
The downside, however, remains cushioned on the back of a negative tone seen around the European equities, which underpin the demand for the funding currency Euro. Further, upbeat Eurozone current account data combined with some option expiries in play, help to keep the range-trade intact.
Markets now look forward to the US housing starts and building permits data for fresh incentives on the prices.
EUR/USD Technical Levels
Slobodan Drvenica at Windsor Brokers Ltd., noted: “The price may hold in extended consolidation between cloud base (1.1827) and key support at 1.1742 (Fibo 38.2% of 1.1553/1.1859 upleg reinforced by rising 100SMA), as daily MA’s remain in bullish setup and underpin. An only firm break below 1.1742 would sideline near-term bulls for stronger correction of 1.1553/1.1859 upleg). Bullish scenario needs sustained break above daily cloud (1.1827/1.1877) to resume steep recovery from 1.1553 (07 Nov low).”