EUR/USD clings to intraday gains, just below mid-1.1300s
• The USD retreats farther from 1-1/2 year tops and helped catch some bids.
• Bulls seemed rather unaffected by today’s softer Euro-zone CPI figures.
• Last week’s dovish ECB shift/dismal PMI prints to cap any strong up-move.
The EUR/USD pair built on its goodish intraday climb and spike to fresh session tops, just above mid-1.1300 in the last hour, albeit quickly retreated few pips thereafter.
After a brief Asian session consolidation phase, the pair picked up pace since the early European session and recovered the majority of its Friday's downslide to over two-week lows amid a follow-through US Dollar retracement from 1-1/2 year tops.
With investors looking past Friday's stronger US monthly retail sales report, uncertainty over the Fed's monetary policy stance in 2019 kept the USD bulls on the defensive and helped the pair to regain positive traction on the first day of a new trading week.
As Yohay Elam, FXStreet's own Analyst explains: “The Fed is expected to raise rates in its last meeting of the year. However, there is growing uncertainty about the plans for 2019 — the most recent dot-plot from September points to three increases. However, some signs of a slowdown and a few dovish comments cause markets to rethink.”
The positive momentum seemed rather unaffected by today's softer Euro-zone final CPI print, coming in at 1.9% y/y as compared to 2.0% original estimate. This, against the backdrop of Friday's dismal Euro-zone PMI prints, reaffirmed last week's dovish ECB shift, albeit did little to prompt any fresh selling around the shared currency.
In absence of any major market moving economic releases, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum ahead of this week's key event risk - the latest FOMC monetary policy update, scheduled to be announced during the US trading session on Wednesday.
“The most substantial hurdle is around 1.1347 which is a convergence of the Fibonacci 38.2% one-week, the Bollinger Band 4h-Middle, the Simple Moving Average 100-1h, the SMA 5-one-day, and the SMA 100-h. Looking down, some support awaits at around 1.1288 which is the meeting point of the BB one-day Lower, the BB 4h-lower, and the BB1h-Lower. It is only a weak support line,” Yohay added further.