- Euro corrected lower against the dollar on Tuesday, after strong previous rally.
- EUR / USD remains biased to the upside, although the momentum eases and faces resistance at 1.1750.
The EUR / USD extended the correction from the day high to 1.1726, marking a new low for Tuesday. It then bounced and rose to 1.1742. It is trading around the 20 hour moving average, unable to firmly return above it.
The dollar is still weak in the market, after suffering two days of significant falls. Equity markets remain optimistic and Treasury yields are not showing large variations. This context provides some support for the EUR / USD pullbacks.
The EUR / USD’s bullish path is ahead of a resistance zone at 1.1750, that if it yields, it could further boost the euro. Down 1.1725 is the first support and then follows the 1.1700 / 05 area, which if broken, would increase negative pressure.
When it comes to data, New home sales data and the Richmond Fed index will be released in the US on Tuesday. The focus is on the discourse of Jerome Powell, the chairman of the Federal Reserve on Friday at the Jackson Hole symposium, where it is estimated that he could make announcements.
“The dollar continues to lose some of its recent gains at the Jackson Hole symposium, particularly against those of the G10 and emerging markets. We think this could be extended a bit more, but lately we see that the declines will find support. We believe the first threshold for the fade to come in at 1.1780 / 00 on the EUR / USD, which roughly coincides with the daily bearish resistance line, “said TD Securities analysts.
Technical levels
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