“¢ The USD fails to preserve/build on the early attempted bounce led by risk-off mood.
“¢ Dovish Fed expectations continue to weigh on the buck and helped regain traction.
“¢ Focus remains on the upcoming US-China trade talks and the FOMC policy meeting.
The EUR/USD pair quickly reversed an early European session dip to sub-1.1400 level and has now moved within striking distance of near two-week tops, set earlier today.
The pair did witness some intraday profit-taking at the start of a new trading week, especially after the latest leg of nearly 140-pips strong upsurge from over six-week lows touched in the aftermath of a more dovish ECB outlook, and a general risk-off mood, which extended some support to the US Dollar.
However, dovish Fed expectations, further reinforced by Friday’s reports that the central bank is considering to stop shrinking its massive balance sheet sooner-than-expected, kept a lid on the USD uptick, rather prompted fresh selling at higher levels and helped the pair to regain positive traction.
Currently hovering around the 1.1420 region, advancing for the second straight session, market participants now look forward to the ECB President Mario Draghi’s testimony before the European Parliament Economic and Monetary Affairs Committee for some impetus.
The key focus, however, will be on the upcoming US-China trade talks, to see if the world’s two largest economies can reach a compromise on trade disputes, and the latest FOMC monetary policy update, wherein the central bank is expected to signal a pause in the recent tightening cycle.
This followed by the closely watched US monthly jobs report, popularly known as NFP, will play an important role in influencing the near-term sentiment surrounding the buck and eventually provide a fresh directional impetus to the major.
Technical levels to watch
Immediate resistance is pegged near 100-day SMA, around mid-1.1400s, above which the pair is likely to aim towards reclaiming the key 1.1500 psychological mark. On the flip side, the 1.1400-1.1390 region might continue to protect the immediate downside, which if broken might prompt some fresh selling and accelerate the slide back towards the 1.1360-50 horizontal support.
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