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  • EUR/USD gains momentum on the day amid better risk mode.
  • Wall Street technology stocks have gained, creating a positive risk sentiment for the currency markets.
  • ECB’s dovish stance may keep the gains limited.

In early Asia, buyers snapped up the EUR/USD price around 1.1610, sparking a new rally towards 1.1650 as the greenback lost momentum amid risk-on mode in the markets.

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Asia’s markets lauded Wall Street’s technology stocks gains amid strong corporate earnings reports, assuaging concerns about inflation and its impact on the economy.

The rebound in the major currency pair is accelerating after a decline in US Treasury bond yields and a pause in the yield curve flattening amid disappointing US industrial production data.

Further growth in the EUR/USD pair is likely to be limited by differing views of monetary policy by the Federal Reserve and the European Central Bank (ECB). As early as November, the Fed will cut incentives to fight the pandemic, while the ECB urges flexibility in post-crisis stimulus measures.

“I think there should be flexibility – we certainly have to discuss how we can adapt our procurement programs,” said ECB politician Ignazio Visko on Monday.

On an economic calendar with light data, the dollar’s performance and risk trends will dominate the pair. Market participants focus on the speeches of the representatives of the ECB and FRS.

EUR/USD price technical analysis: 200-SMA to provide resistance

EUR/USD 4-hour price chart analysis

The EUR/USD price has paused the rally around 1.1650 while the bias remains technically bullish. The price lies well above the 20-period and 50-period SMAs on the 4-hour chart. The bulls are aiming to test the 200-period SMA around 1.1665 ahead of the horizontal level at 1.1680. On the flip side, any downside correction may test the 1.1600 handle ahead of YTD lows around 1.1520.

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The pair have completed 98% average daily range during the Asian session, which indicates that the market has almost done its course of action for the day. However, any further action can be seen as the volatility is on the rise today. The volume data suggests a bullish scenario at the moment.

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