- EUR/USD fails to capitalize on the early uptick to over one-month tops.
- A modest USD rebound might have prompted some long-unwinding trade.
- The downside remains limited ahead of the ECB monetary policy update.
The EUR/USD pair extended its steady pullback from over one-month tops and is currently placed near the lower end of its daily trading range, around 1.1130-25 region.
The pair failed to capitalize on the previous session’s upsurge/early uptick to the highest level since November 4 and started retreating from the vicinity of the very important 200-day SMA amid a modest US dollar uptick.
Focus remains on the ECB decision
A modest pickup in the US Treasury bond yields, amid improving global risk sentiment, helped the greenback to stage a modest recovery from near four-month lows set on Thursday in the aftermath of dovish sounding FOMC statement.
It is worth recalling that the Fed left interest rates unchanged on Wednesday but signalled that the policy stance is likely to remain accommodative and also indicated that interest rates would remain on hold through 2020.
This coupled with some repositioning trade – heading into the latest ECB monetary policy update – further seemed to have contributed to the pair’s intraday pullback, albeit the downside is likely to remain limited.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent positive move might have already run out of the steam ahead of a technically significant moving average (200-DMA).
The ECB decision will be followed by the post-meeting press conference, where comments by the new ECB President Christine Lagarde might influence the shared currency and produce some short-term trading opportunities.
Technical levels to watch
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