EUR/USD reverts the downside, clinches highs near 1.1780

The single currency has left the initial bearish note behind and is now pushing EUR/USD to test daily highs in the 1.1770/80 band.

EUR/USD bid ahead of German CPI

After three consecutive daily pullbacks, spot is now staging a significant rebound to the vicinity of 1.1780 as the upside momentum around the greenback continues to deflate.

In fact, the up move in USD is now running out of steam as markets participants continue to digest the recent tax reform proposal by the Trump’s administration, while yields of the key US 10-year benchmark have now eased from earlier tops.

In addition, ECB’s board member P.Praet said that the ECB is not talking about exiting its QE programme, just a recalibration of the current measures, adding at the same time that the central bank aims for sustainable inflation (rather than the current transitory stance). Member Hansson said earlier that rates should stay in current low levels at least while QE is underway.

In the meantime, spot stays firm ahead of key advanced German inflation figures for the current month, while EMU’s business climate surpassed estimates and September’s consumer confidence came in at -1.2, in line with consensus.

Across the pond, US trade balance figures are due followed by initial claims and the third revision of US Q2 GDP. In addition, FOMC’s members Fischer, George and Bostic will also speak.

EUR/USD levels to watch

At the moment, the pair is gaining 0.19% at 1.1770 facing the next hurdle at 1.1811 (55-day sma) followed by 1.1879 (10-day sma) and finally 1.1908 (21-day sma). On the other hand, a breakdown of 1.1662 (low Aug.17) would target 1.1555 (100-day sma) en route to 1.1329 (low Jul.6).