EUR/USD looks to extend the retreat below 1.1800 ahead of ZEW

The EUR/USD pair is seen correcting a part of yesterday’s extensive rally and now break below 1.1800 levels, as the US dollar extends its broad based recovery mode.

EUR/USD back on 1.17 handle

Having ran into resistances near five-day tops of 1.1828 in the Asian trades, the spot drifted lower, now meeting fresh supply, as the USD recovery gains traction heading into the early European trading. The USD index rises +0.18% to hit daily highs at 93.17, reversing a dip below 93 handle.

The latest upmove in the greenback versus its main competitors can be mainly attributed to rising Treasury yields, in the wake of risk recovery, as geopolitical tensions between North Korea and US appear to wane, while attention now turns towards the Jackson Hole Symposium for fresh insights on the global monetary policies.

Moreover, expectations of a slight deterioration in the German economic sentiment also weigh negatively on the EUR/USD pair. Markets believe that the recent EUR appreciation is likely to sour the sentiment around the German businesses.

Looking ahead, the major will receive fresh impetus from the ZEW surveys, while the ECB President Draghi’s speech and German flash PMIs due tomorrow are eagerly awaited, in absence of significant macro news due out from the US today.

EUR/USD Technical Set-up  

Haresh Menghani, Analyst at FXStreet noted: “Sustained move beyond 1.1830-35 area would reinforce the bullish bias and lift the pair immediately towards 1.1880 horizontal resistance. A follow through buying interest might now lift the pair beyond the 1.1900 handle towards its next hurdle near 1.1965 level en-route the key 1.20 psychological mark. On the flip side, the descending trend-channel resistance break-point, near the 1.1800 region, now becomes immediate support to defend. Failure to hold the mentioned support could drag the pair back towards the 1.1760-55 region and any further weakness should now be limited near 1.1730-25 horizontal support.”