EUR/USD fades a spike to 1.1820 post-German IFO
- USD attempts a bounce across the board.
- Mixed German IFO surveys disappoint.
- Focus on the US housing data and House tax vote.
The EUR/USD pair failed to sustain the break above 1.18 handle and quickly eroded 20pips on the release of the German IFO business surveys, now meandering just near the last, as attention turns towards the US House vote on the tax reform bill.
EUR/USD back below 100-DMA at 1.1808
The spot trimmed gains, although remains well bid amid persistent weakness seen around the US dollar across its main competitors in subdued trades, as investors remain wary over the impact of the US tax reforms on the country’s economic outlook.
However, the major fell back below the 100-DMA barrier, as the sentiment around the Euro was dampened by a drop in the German IFO business climate numbers while the latest remarks from the ECB policymaker Hansson also keeps the gains limited in EUR/USD.
With the German data out of the way, the focus now shifts towards the US building permits, housing starts, and current account data for fresh trading impetus ahead of the US House vote on the tax bill.
Viraj Patel, a foreign exchange strategist at ING, noted: “The tax reform is going to be one of the key angles for markets this week...(but) nobody is going to be taking any major positions before the year-end.”
EUR/USD Technical Levels
Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, explained: “Lift above daily cloud would look for next pivotal barriers at 1.1862/67 (14 Dec spike high/Fibo 61.8% of 1.1961/1.1717 descend). Expected increased downside risk on repeated failure to clear cloud top, with return below 10SMA (1.1779) which holds today's action, to shift near-term focus lower. Res: 1.1823; 1.1834; 1.1862; 1.1878
Sup: 1.1779; 1.1760; 1.1737; 1.1717.”