• A sudden fall in the USD prompts some follow-through short-covering move.
• Further gains likely to remain capped amid continued Italian political uncertainty.
After an initial dip to 1.1757, the EUR/USD pair caught some fresh bids and was now seen building on overnight rebound from 6-month lows.
The pair's latest leg of sharp uptick over the past hour or so, further beyond the 1.1800 handle, could be solely attributed to a sudden fall witnessed around the US Dollar. Despite some renewed uptick in the US Treasury bond yields, the greenback failed to preserve early gains and was seen as one of the key factors prompting some additional short-covering move for the second consecutive session.
The up-move, however, lacked any strong bullish conviction amid continued political uncertainty in Italy. This coupled with the latest US-China trade optimism and expectations of faster Fed monetary policy tightening cycle might further contribute towards capping any meaningful up-move.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have bottomed out in the near-term and the up-move is backed by some genuine buying, and not solely driven by short-covering.
• EUR rebound may be limited - AmpGFX
There isn't any major market-moving economic data due for release on Tuesday and hence, the USD price-dynamics might continue to act as an exclusive driver of the pair's momentum.
Technical levels to watch
A follow-through buying interest has the potential to continue lifting the pair towards 1.1845-50 supply zone, above which the momentum could further get extended towards reclaiming the 1.1900 handle.
On the flip side, any meaningful retracement back below the 1.1800 handle now seems to find strong support near the 1.1765 level, which if broken would pave the way for an extension of the pair's near-term bearish trajectory.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.