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EUR/USD bounces off lows, back around 1.1400 ahead of Beige Book

  • Alternating trends continue to dominate the pair’s price action.
  • The greenback eases from daily highs near 96.20.
  • US Import Prices contracted 1.0% MoM in December.

After briefly testing sub-1.1380 levels – or session lows - EUR/USD has managed to regain some composure and return to the 1.1400 neighbourhood amidst volatile risk trends.

EUR/USD focused on Beige Book, UK politics

Despite the ongoing rebound, the pair remains under pressure within the broader correction lower from peaks in the 1.1580 area recorded last week, so far with support holding on to the 1.1380 region, where sits the 55-day SMA.

Price action today remains limited and within recent ranges, while markets’ attention remains on the imminent no-confident vote in the UK. According to prior surveys, PM Theresa May is expected to survive the vote, although she should bring in a ‘plan B’ to the table on Monday.

No news from the calendar in Euroland today, where Italian and German December CPI figures matched the preliminary prints. In the US, Import Prices contracted less than expected 1.0% MoM during the last month of 2018.

What to look for around EUR/USD

The likelihood of extra gains in spot is losing traction amidst a somewhat improved tone in the buck and the recent cautious/dovish tone from the ECB. Looking ahead,  investors would likely pay increasing attention to the performance of the economy in the bloc amidst the ongoing slowdown and upcoming events including discussions around the French budget, Brexit and EU Parliamentary elections in May, while the probability of a technical recession in Germany in H2 2018 would also collaborate with the cautious sentiment.

EUR/USD levels to watch

At the moment, the pair is retreating 0.1612 at 1.1399 facing immediate contention at 1.1378 (low Jan.16) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1306 (2019 low Jan.3). On the upside, a break above 1.1424 (high Jan.16) would target 1.1442 (38.2% Fibo of the September-November drop) and finally 1.1471 (100-day SMA).

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