EUR/USD: Upside gains traction, re-attempts 1.1845 ahead of ADP

The EUR/USD pair continued to find fresh buyers near 1.1790 region, taking the rate back above 1.18 handle in a bid to re-test two-and- a half year tops of 1.1845 reached earlier this week.

EUR/USD trades above all major DMAs

The renewed uptick seen in EUR/USD gains further traction in early Europe, as broad based US dollar recovery faltered, with bears firmly guarding 93 handle since the last US session. The rebound in Treasury yields also stalled, as cautiousness sets into the market ahead of the crucial US ADP jobs report.

The spot remains on track to test the multi-month tops near 1.1850 levels, in the wake of the recent series of upbeat Eurozone fundamentals, which remain supportive of the ECB’s hawkish narrative. Thus, narrowing monetary policy divergence between the ECB and Fed is back in play.

Meanwhile, the upcoming US ADP jobs data will provide fresh hints on the strength of the US economy, especially after unimpressive US economic data released so far this week, which continues to downplay the odds of a Fed rate hike this year. The immediate focus now remains on the Eurozone PPI data for fresh impetus on the Euro.

EUR/USD Technical Set-up  

According to Jim Langlands at FX Charts noted: “Technically, above the trend high of 1.1844, there is little to stop the Euro heading on towards 1.1975/1.2000, with very little resistance to stand in the way ahead of those levels. The next Fibo level is not actually seen until 1.2165 (50% of 1.3993/1.0340). While the daily momentum indicators are overbought, hinting at a possible correction, the weekly and monthly charts are both heading firmly higher.”

“On the downside, near term support arrives at the session low, and the 200 WMA, at 1.1785. Below there, we could head back to the 31 July low of 1.1722 and eventually to 28 July’s low of 1.1670, although a little unlikely at this stage,” Jim added.