EUR/USD: Bounce still capped below 1.1100 ahead of US data
- US dollar corrects lower broadly amid fresh trade optimism.
- Falling Treasury yields lend support to EUR/USD’s bounce.
- Focus on US Durable Goods data amid pre-Xmas light trading.
EUR/USD is seen breaking its Asian bearish consolidation phase to the upside in early European trading, as the bulls yearn to regain the 1.11 handle amid quiet pre-Christmas holiday trading and broad-based US dollar correction.
US Durable Goods Orders data to offer fresh direction?
The US dollar is retreating further away from the two-week tops reached against its main peers last Friday at 97.76, with the US dollar index now trading near daily lows of 97.61. The renewed weakness in Treasury yields amid cautious optimism is seen dragging the greenback broadly lower.
US President Trump hinted on Saturday that the phase one trade deal will be signed “very shortly” while China announced that it will adjust the tariffs on the American goods, effective Jan. 1. Markets cheer the trade positively headlines but a sense of caution prevails amid light trading in the lead upto the year-end holiday season.
However, the upside attempts in the spot appear limited, as Friday’s strong US growth numbers will continue to support the USD bulls, with easing US-China trade tensions and solid US fundamentals likely to run down expectations of Fed rate cuts next years.
Looking ahead, the immediate focus now remains on the German Bundesbank monthly economic report for fresh trading incentives while the US Durable Good Orders data will likely provide the next direction in the prices. Also, thin trading conditions could exacerbate the moves in the major.
EUR/USD Technical levels to consider