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EUR/USD jumps back to 1.1400 handle, fresh 1-week tops

   •  Report on the end of the Italian budget deficit debate underpinning the EUR.
   •  Uncertainty over the Fed's rate hike path continues to weigh on the USD.
   •  Investors' focus remains glued to the latest FOMC decision, due later today.

The EUR/USD pair rallied back to over one-week tops in the last hour, albeit continued with its struggle to build on the positive momentum further beyond the 1.1400 handle.

After yesterday's late pull-back, reports on the end of Italy's budget deficit debate underpinned the shared currency and helped the pair to regain positive traction for the third consecutive session on Wednesday. 

The European Commission is said to have accepted Italy's revised budget proposal of 2.04% deficit in 2019 and the optimism was evident from narrowing Italian-German 10-year yield spread, currently standing at 259 bps.

The up-move was further supported by the prevalent selling bias surrounding the US Dollar, which languished below mid-96.00 amid growing market bets that the Fed might signal a pause to its rate hike cycle. 

Uncertainty over the Fed's rate hike path in 2019 seemed to be the only factor holding investors from placing any aggressive bullish bets and keeping a lid on any strong follow-through up-move, at least for the time being.

The FOMC is scheduled to announce its latest monetary policy decision later during the US trading session and the updated economic projection, especially the so-called 'dot-plot' will now be looked upon for a fresh directional impetus.

Technical levels to watch

On a sustained move beyond the 1.1400 handle, the pair is likely to head towards challenging the 1.1435-40 intermediate support zone before eventually darting towards reclaiming the key 1.1500 psychological mark. 

On the flip side, retracement back below 1.1380 level now seems to find strong support near the 1.1360-50 region, which if broken might turn the pair vulnerable to slide back towards retesting the 1.1300 handle.

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