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  • US dollar recovers ground as Euro gets hits by Brexit concerns.
  • EUR/USD still heads for weekly gains despite Friday’s slide.

The EUR/USD pair pulled back from the highest level since June and trimmed part of yesterday’s gains. A modest recovery of the US dollar and UK PM May comments on Brexit hit the Euro.

Earlier today, the pair extended the rally and reached 1.1802. It lost momentum around the 1.1800 and pulled back modestly. After UK PM May demanded respect from EU leaders and raised concerns about a “no deal” outcome on Brexit, EUR/USD dropped following the dramatic slide of GBP/USD.

After the beginning of the US session, the euro bottomed at 1.1730. During the last hours it had been moving sideways in the 1.1765/1.1730 range, down for the day, but still more than a hundred pips above the level it had a week ago. It is about to post the highest weekly close since June. Weekly gains were supported by a weaker US dollar. Next week the key event will be the Fed’s meeting. A rate hike is expected and the tone and projections of the FOMC staff are likely to set the tone of the US dollar.

Levels to watch

The rally of EUR/USD eased on Friday, but the trend still points to the upside. As long as it remains above an uptrend line from August lows, currently at 1.1640, the bullish trend will remain in place. Before that line, support is seen at 1.1720 and 1.1700.

To the upside, the immediate resistance is seen at 1.1765/70 and then the 1.1800/05 area. A break higher could clear the way for a test of 1.1850.