EUR/USD extends the bounce towards 1.1350

• Fresh USD selling, Italian budget optimism lifts EUR/USD northwards.
• Awaits Eurozone final CPI for near-term trading opportunities.

The EUR/USD pair is on a steady rise above the 1.13 handle so far this Monday, with the bulls having gathered strength in Europe, as the US dollar correction across the board regains momentum.

The greenback hit 19-month highs versus its main competitors at 97.71 on Friday, after China slowdown fears intensified following weaker Chinese macro data and propped up safe-haven bids for the US dollar. The USD index now extends the retreat to 97.30 levels, down -0.13% on the day.

Moreover, the bid tone around the common-currency can be also attributed to the renewed optimism around the Italian budget after ANSA reported overnight that the Italian coalition leaders have reached an agreement over the budget accord.

Furthermore, a bout of profit-taking cannot be ignored in the EUR/USD pair, as markets look to cover their shorts heading into the FOMC rate hike due this Wednesday. In the meantime, the immediate focus remains on the Eurozone final CPI figures due out shortly for further trading impetus.

EUR/USD Technical Levels