EUR/USD surges to fresh session tops, back around 1.18 handle
• Rebounds over 75-pips from session lows.
• Renewed USD selling prompts short-covering.
• Draghi’s testimony holds the key.
The EUR/USD pair quickly reversed early drop and refreshed session tops, beyond the 1.1800 handle in the last hour, recovering over 75-pips from session lows.
The pair found some decent support near the 1.1725-20 region and now seems to have digested the latest political uncertainty in the Euro-zone's largest economy, wherein talks to form a new government led by German Chancellor Angela Merkel collapsed.
The pair's latest leg of sharp up-move, over the past couple of hours, lacked any obvious catalyst and could be attributed short-covering ahead of the ECB President Mario Draghi's testimony on the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, in Brussels.
Meanwhile, the prevalent negative tone around the US Treasury bond yields, coupled with worries over the passage of a long-awaited US tax-cut legislation prompted some fresh US Dollar selling and might have also collaborated to the pair's sharp recovery from session lows.
Technical levels to watch
A follow-through buying interest has the potential to continue boosting the pair towards its next major hurdle near mid-1.1800s, which if cleared might negate any near-term bearish bias and assist the pair towards reclaiming the 1.1900 handle.
On the flip side, 100-day SMA near the 1.1750 region now becomes an immediate support to defend, below which the pair could head towards testing the 1.1700 handle en-route its next important support near the 1.1660 area.