EUR/USD recovers back to 1.0600 neighborhood

The shared currency has managed to reverse some of its early losses against the greenback, helping the EUR/USD major to recover back to 1.0600 neighborhood.

A modest greenback retracement, with the key US Dollar Index reversing majority of daily gains and drifting back below mid-101.00s, has been a key factor supporting the pair's recovery from session low near 1.0575 region. 

Despite of the pull back, the pair traded with bearish bias, and remained well below 3-week high level of 1.0640 touched during early European session on Monday, amid growing political uncertainty in the Euro-area following former French Prime Minister Alain Juppe's statement that he won’t enter the race for the Presidency.

Given that the markets might have already priced-in prospects of an eventual Fed rate-hike action at its upcoming meeting on March 14-15, repositioning trade ahead of this week's key event risks - ECB monetary policy decision and the keenly watched US NFP data on Friday, could have also contributed to the pair's slightly volatile price action on Monday. 

During NY trading session, the release of US factory orders for the month of January and speech by Minneapolis Fed N.Kashkari would be looked upon for some short-term trading impetus.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "As for the technical picture, the 4 hours chart shows that the Momentum indicator resumed its advance after a modest downward corrective movement from overbought readings, whilst the price is firmly above the 20 and 100 SMAs. The 200 SMA stands at 1.0652, while the 1.0650/60 region has proved strong in the past, being then the immediate short term resistance. Further gains beyond the level could see the rally extending up to the 1.0700/20 region, where selling interest will likely be strong enough to reject the advance."

"Below 1.0590 on the other hand, the pair can extend its decline towards 1.0565, a Fibonacci support, followed by 1.0520, although a slide towards this last seems unlikely for today."