EUR/USD bounces off lows, back near 1.0750

The renewed pick up in the demand for the US Dollar has driven EUR/USD to the area of session lows near 1.0730, although it has retaken some pips afterwards.

EUR/USD deflated from 1.0770

Spot has partially faded the bull run to daily highs just above 1.0770 during overnight trade in response to a better sentiment around the greenback. In fact, buyers seem to have returned to the buck after the US Dollar Index pierced the critical support at 100.00 the figure in early trade.

The unwinding positions in the greenback in past weeks allowed the pair to stage quite a significant bounce off 14-year lows in the 1.0340 area seen in early January, all with the fading upbeat mood around ‘Trumphoria’ as the exclusive catalyst for the leg lower.

While EUR has already shrugged off the dovish message from the ECB at its meeting last week, market participants will now turn their attention to the upcoming FOMC meeting, with the probability of another 25 bp rate hike at 97% according to CME Group’s FedWatch tool based on Fed Funds future prices.

Later in the session, preliminary Manufacturing/Services PMIs are due in Euroland, while Existing Home Sales and Markit’s Manufacturing PMI will be the salient releases across the pond.

EUR/USD levels to watch

The pair is now losing 0.19% at 1.0746 and a breakdown of 1.0682 (low Jan.23) would target 1.0645 (short-term support line) and finally 1.0600 (20-day sma). On the upside, the next hurdle is located at 1.0773 (high Jan.23) followed by 1.0798 (high Dec.5) and then 1.0873 (high Dec.8).