EUR/USD off session low, still weak below 1.1050

Having dropped to the lowest level since July 27, the EUR/USD pair managed to recover some of its lost ground but struggled to extend the recovery momentum and remained stuck around 1.1050-40 band.

The pair on Tuesday confirmed a break down by decisively breaking below an important horizontal support near 1.1125-20 region as increasing bets that the Federal Reserve will raise rates this year. The pair negated Tuesday stronger-than-expected release of Euro-zone ZEW economic sentiment and continued drifting lower for the second straight session. 

On Wednesday, the greenback, as measured by the overall US Dollar Index, eased from multi-month peaks as investors now look forward to the release of FOMC minutes, later during NY trading session, which if reaffirms market expectations should boost the greenback across the board and turn the pair vulnerable to extend its downslide further in the near-term.

Technical levels to watch

From current levels, 1.1080 level seems to act as immediate resistance above which the pair is likely to reclaim 1.1100 handle and aim towards testing an important support, now turned strong resistance, near 1.1125-20 area. On the downside, sustained weakness below 1.1030 (session low) is likely to drag the pair below 1.1000 psychological mark towards testing its next support near 1.0970 horizontal support.