EUR/USD rebounds towards mid-1.17s as greenback loses momentum

Following a sharp drop to a fresh weekly low at 1.1689 during the first half of the NA session, the EUR/USD took back its daily losses to turn flat around mid-1.17s. As of writing, the pair was trading at 1.1740, losing 12 pips, or 0.1%, on the day.

Although the latest downfall looked like a technical sell-off as there were no data releases at that time, investors seem to be looking for excuses to buy more US dollars. Similar to yesterday's JOLTS Job Openings and IBD/TIPP Economic Optimism data, today's data from the U.S. were not seen as typical market movers and didn't receive any market reaction when they were released. However, as American traders hit their desks, another greenback rally was triggered, which dragged the pair to its weekly low. After leaping to 93.77, the DXY struggled to extend its gains and is now virtually unchanged on the day at 93.50.

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Tomorrow's economic calendar won't be offering any significant data from the euro area. However, the data from the U.K. could cause sharp fluctuations in the EUR/GBP pair and impact the EUR/USD pair's price action. Primarily a worse-than-expected reading could increase the selling pressure on the already vulnerable cable and push the EUR/GBP higher, supporting a recovery attempt for the EUR/USD pair. Later in the day, weekly initial jobless claims and the Producer Price Index from the U.S. will be looked upon for fresh impetus. Participants recent eagerness to add to their long USD positions could help the USD gather further strength in the second half of the day.

Technical outlook

The pair might need to make a daily close above the critical 200-WMA at 1.1775 to start a deeper correction move. Above that level, 1.1845 (Jul. 31 high) and 1.1905 (Aug. 2 high) align as following technical resistances. On the flip side, supports could be seen at 1.1690/1.1700 (daily low/psychological level), 1.1610 (Jul. 26 low) and 1.1500 (psychological level).

• EUR/USD potential test of 1.1510 on the cards – Commerzbank