- EUR/USD faces rejection near 1.1890, turns south ahead of a big week.
- Mixed markets amid quiet trading offer support to the US dollar bulls.
- Focus remains on the US/EZ CPI, Powell’s testimony due later this week.
After a two-day rebound, EUR/USD is retreating towards the 1.1850 level, as the US dollar attempts a tepid bounce amid a mixed sentiment.
Starting out a fresh week, covid concerns remain unabated, as Sydney extends the lockdown restrictions amid escalating outbreaks. Meanwhile, markets remain cautious ahead of the US inflation and Fed Chair Jerome Powell’s testimony on the semi-annual Monetary Policy Report released last Friday.
Therefore, the US dollar catches a fresh bid as a safe haven, with the S&P 500 futures dropping 0.17%, despite the rally in the Asian stocks. The regional equities advance, tracking the record close on Wall Street last week.
Despite the pullback, the main currency pair holds a major part of Friday’s gains while looking to test the 1.1850 level. The spot is currently trading at 1.1869, marginally lower on the day, having hit a three-day high of 1.1882 on Friday.
The major rebounded from three-month lows of 1.1782 on Thursday after the European Central Bank (ECB) adopted a symmetric 2% inflation target in its strategic review meeting.
“The EUR/USD pair fell short of losing its bearish potential in the daily chart. The pair keeps developing below the 61.8% retracement of its March/May rally at 1.1920, the main resistance level. The 20 SMA heads lower almost vertically above the current level, extending its slump below converging 100 and 200 SMAs. The Momentum indicator is retreating from its midline, while the RSI hovers advances just modestly at around 41. The 4-hour chart shows that a flat 20 SMA provided support, although a bearish 100 SMA contained advances. Technical indicators are neutral within positive levels, suggesting a test of the mentioned 1.1920 level is possible in the near term. Support levels: 1.1780 1.1740 1.1710. Resistance levels: 1.1880 1.1920 1.1960,” FXStreet’s Chief Analyst Valeria Bednarik explains.
