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  • Bulls extend control, takes on 1.1600 amid easing Italian political tensions.
  • Upbeat German retail sales and regional CPIs bolster the EUR recovery.
  • Key focus on German CPI, US ADP and prelim GDP figures.

After a brief consolidative stint around 1.1575 region, the EUR/USD pair broke to the upside and conquered the 1.16 handle, before reversing towards the familiar range near 1.1585 levels.  

EUR/USD fails to resist above 1.1600

Despite easing Italian political tensions, the spot failed to sustain the rebound above the 1.1600 mark, as traders remain cautious and continue to assess the risks of fresh Italian elections, as it could deliver a stronger mandate to the Eurosceptic parties.

Moreover, the rebound staged by Treasury yields combined with higher Italian stocks somewhat weigh down on the funding currency Euro. However, the corrective rally in EUR/USD could regain traction should the German CPI data beat estimates, given the bounce in the regional CPI figures point to upbeat harmonized CPI readings.

Also, the common currency remains supported amid better-than-expected German retail sales data while the bulls await the US ADP and GDP releases for the next push higher.

EUR/USD Technical Levels

Karen Jones, Analyst at Commerzbank, notes “EUR/USD has reached target, namely the 1.1553 November low and the 200-week ma at 1.1433 and the 50% retracement of the move 2017-2018 at 1.1450. We expect to see some profit taking here.  
Rallies will need to overcome the accelerated downtrend at 1.1710 in order to alleviate downside pressure and signal a deeper retracement to 1.1810/1.1935.”