EUR/USD: Rebound capped near 1.1875, EZ Sentix eyed
- USD boosted by tax news and faulty reports on Flynn.
- Back below 1.1900 levels.
- Eyes on EU/UK Brexit deal, Eurozone Sentix.
The bid tone behind the US dollar is seen growing bigger in early Europe, now pushing the EUR/USD pair back towards the midpoint of 1.18 handle.
EUR/USD: 1.1880 – a tough nut to crack
Having tested 1.19 handle at Asia open, the spot ran through fresh offers and witnessed a bearish 30-pips gap, only to stage a solid comeback to test the key hurdle placed near 1.1880 levels, the confluence of 5 and 10-DMA.
The major failed to chew the offers near the last and reverted to the familiar region near 1.1860 amid persistent broad-based US dollar strength, backed by the US Senate’s approval of the tax overhaul bill and following the faulty ABC report on former National Security adviser Flynn.
On Friday, EUR/USD jumped to fresh four-day tops of 1.1942 after the US dollar got hammered across the board after reports hit the wires that Michael Flynn, Trump's ex-national security adviser, was taken into custody after he pleaded guilty to lying to the FBI during the investigation of Russia's involvement in the 2016 election campaign.
Meanwhile, sentiment around the Euro was also lifted by upbeat Euro area final manufacturing PMI reports, while the US Nov ISM manufacturing PMI data disappointed markets.
In the day ahead, the pair will continue to get influenced by the USD dynamics ahead of the Eurozone Sentix Investor Confidence gauge and the US factory orders data. Also, the EU/UK meeting in the Brexit deadline will remain in the spotlight.
EUR/USD Technical Levels
Haresh Menghani, Analyst at FXStreet, notes: “From a technical perspective, the pair now seems to have formed a descending trend-channel on hourly charts. Hence, a break below a short-term ascending trend-line support, held through November, would confirm a test of the trend-channel support, currently near the 1.1800 handle. A decisive break through the channel would confirm a near-term top formation and turn the pair vulnerable to extend is corrective slide in the near-term.”
“On the upside, any recovery attempts back above the 1.1900 handle might continue to confront fresh supply near the descending trend-channel resistance, currently near the 1.1925 region,” Haresh adds.