“¢ A goodish pickup in the USD demand/US bond yields prompts some profit-taking.
“¢ Dovish ECB outlook/German political woes seemed to keep a lid on the shared currency.
The EUR/USD pair snapped three consecutive days of winning streak and quickly retreated around 40-pips from 1-1/2 week tops, eroding a major part of overnight gains.
In absence of any fresh fundamental catalyst, a goodish pickup in the US Dollar demand, supported by an uptick in the US Treasury bond yields was seen as one of the key factors behind the pair intraday retracement from the 1.1720 level, marking 61.8% Fibonacci retracement level of the post-ECB downfall.
Meanwhile, emerging political risks in the region’s largest economy – Germany held investors from placing aggressive bullish bets and further contributed towards keeping a lid on the pair’s ongoing recovery move.
Against the backdrop of a dovish ECB outlook, disagreements about migration are threatening to break the German government coalition and might have collaborated towards prompting some long-unwinding/profit-taking, especially after the recent upsurge of over 200-pips since last Thursday.
In absence of any market moving EZ economic data, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum on Tuesday. Later during the early North-American session, the release of Conference Board’s US consumer confidence index will be looked upon for some impetus.
Technical levels to watch
Immediate support is pegged near the 1.1660-55 area, which if broken could drag the pair back towards the 1.1620 intermediate level en-route the 1.1600 round figure mark. On the flip side, any bullish momentum back above the 1.1700 handle might continue to confront fresh supply near the 1.1720 level, above which the pair is likely to aim towards challenging the 1.1800 mark.
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