EUR/USD retreats from over 1-week tops, back below 1.18 mark

The EUR/USD pair failed to build on its up-move further beyond the 1.1800 handle and has now trimmed some of its early strong gains to over one-week tops.

Currently trading around 1.1780 level, the pair's pull-back from session highs could be attributed to increasing nervousness ahead of the Catalan President Carles Puigdemont's key address to the regional Parliament. 

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Despite yesterday’s hawkish comments from the ECB Executive Board member Sabine Lautenschläger, traders seemed refraining from placing aggressive bets amid deepening clash between Catalan separatists and Spanish authorities. 

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Adding to this a modest rebound in the US Treasury bond yields helped the key US Dollar Index to bounce off daily lows and further collaborated towards keeping a lid on the pair's up-move. 

Today's key focus would remain on the Catalan leader’s scheduled appearance at 16.00 GMT, where a possible declaration of independence could weigh heavily on the shared currency and attract some fresh selling pressure around the major.

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Meanwhile, speech by Minneapolis President Neel Kashkari might also influence the USD price dynamics and provide some short-term trading impetus ahead of Wednesday's FOMC meeting minutes. 

Technical levels to watch

Any strong follow through up-move beyond the 1.1800 handle is likely to be capped at 50-day SMA, currently near the 1.1845 region, which if cleared would negate any near-term bearish bias.

On the flip side, 1.1755-50 area is likely to protect immediate downside, below which the pair is likely to slide back to the 1.1710-1.1700 area before eventually sliding to retest Friday's 2-1/2 month lows near the 1.1670 region.