EUR/USD finds some support ahead of mid-1.1200s amid a modest USD pullback

   •  The shared currency remains depressed amid slowdown fears in the region’s core economies.
   •  A modest USD profit-taking lends some support and eases the prevalent bearish pressure. 

The EUR/USD pair reversed an early European session dip to fresh 2019 lows and quickly recovered around 25-30 pips, albeit lacked any strong follow-through.

The pair extended its bearish trajectory from levels beyond the key 1.1500 psychological mark and lost some additional ground on Tuesday. The pair fell to an intraday low level of 1.1258 – the lowest level since Nov. 13, albeit managed to find some support at lower levels amid a modest US Dollar pull-back.

Despite a follow-through uptick in the US Treasury bond yields and news of the deal to avert a fresh government shutdown, the greenback failed to capitalize on the recent rally to multi-week tops and was seen as one of the key factors that extended some support to the major, at least for the time being. 

The uptick, however, lacked any strong conviction and remained capped amid growing market concerns about the health of the Euro-zone’s economic growth, further reaffirmed by Bundesbank President Jens Weidmann’s comments this Tuesday, which now seems to have pushed the ECB’s planned rate hike to 2020. 

Hence, it would be prudent to wait for a strong follow-through recovery before confirming that the pair might have formed a near-term bottom and positioning for any further near-term appreciating move as the focus now shifts to scheduled speeches by several FOMC officials, including the Fed Chair Jerome Powell.

Technical levels to watch