EUR/USD stalls German political news-led downfall, Draghi in focus
• Dumped on political uncertainty in region's largest economy.
• Sill manages to hold above 1.17 handle.
Selling pressure around the shared currency seems to have abated, at least for the time being, with the EUR/USD pair finding some support near the 1.1725 region.
The pair got slammed at the start of a new trading week and was being weighed down by the news that German Chancellor Angela Merkel has failed to pull together a coalition government.
Merkel's decision to meet President Frank-Walter Steinmeier signalled that she would not seek to form a minority government, with a new election now looking a distinct possibility, which might now keep a lid on any meaningful near-term up-move for the pair.
Meanwhile, concerns over the passage of a long-awaited US tax cut legislation, coupled with a sharp slide in the US Treasury bond yields have failed to any additional boost to the US Dollar and was seen lending some support to the pair.
The ECB President Mario Draghi is due to testify on the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee on Monday and would now be looked upon for some immediate respiet for the EUR bulls.
Apart from the latest German political developments, this week's FOMC meeting minutes, due for release on Wednesday, would be looked upon for fresh clues over the central bank's monetary policy outlook. Adding to this, the key US durable goods orders data would also help investors determine the pair's trajectory during the holiday-shortened week.
Technical levels to watch
Immediate support is pegged near the 1.1700 handle, which if broken might prompt some fresh selling and accelerate the slide towards 1.1660 horizontal support en-route the 1.1610-1.1600 region.
On the flip side, 100-day SMA, currently near mid-1.1700s, now seems to act as immediate resistance, above which the pair is likely to make a fresh attempt to recover back towards the 1.1800 handle.