“¢ The USD regains positive traction and triggers the initial leg of the intraday slide.
“¢ Disappointing Euro-zone industrial production data adds to the selling bias.
“¢ Traders now eye the latest US consumer inflation figures for fresh impetus.
The EUR/USD pair extended its retracement slide from weekly tops and has now drifted into negative territory, eroding a part of previous session goodish bounce from three-month lows.
After the overnight profit-taking slide, the US Dollar regained positive traction since the early European trading session and triggered the initial leg of the pair’s retracement slide from an intraday high level of 1.1342.
The greenback found some support from the overnight news that the US lawmakers have reached a tentative budget deal to avert another partial government shutdown and growing optimism over a possible US-China trade deal.
The US President Donald Trump said on Tuesday that he will push back a March 1 deadline for the imposition of new tariffs on Chinese imports if there is enough progress on addressing various trade issues between the two countries.
Meanwhile, the shared currency was further weighed down by yet another disappointing Euro-zone economic data, showing that the region’s industrial production contracted more than expected for the second straight month in December.
The incoming economic data continues to fuel concerns about the health of the Euro-zone’s economic growth, which might force the ECB to push back its planned rate hike to 2020 and further collaborated to the weaker sentiment surrounding the common currency.
It would now be interesting to see if the pair is able to find any buying interest at lower levels or the current slide marks the resumption of the prior depreciating move as the focus now shifts to the release of the latest US consumer inflation figures.
Technical levels to watch
Immediate support is pegged near the 1.1300 handle, below which the pair is likely to extend the slide back towards challenging the 1.1260-55 area before eventually falling to Nov. 2018 swing lows, around the 1.1215 region.
On the flip side, the 1.1340-45 region now seems to have emerged as an immediate resistance, which if cleared might trigger a short-covering bounce but seems more likely to remain capped at 50-day SMA, around the 1.1390-1.1400 region.