EUR/USD extends strong recovery move beyond 1.0600 handle

The EUR/USD pair held on to strong recovery gains above 1.0600 handle and has now reversed all of Friday's losses recorded in the aftermath of dovish ECB taper.

Currently trading around 1.0620-25 region, testing session peak, the spot gained traction on Monday as surging oil prices is expected to help lift the regions inflation and reflate the economy. Adding to this, a modest greenback retracement, as measured by the overall US Dollar Index, is also supportive of the pair's strong recovery move at the start of a fresh trading week. 

With an empty US economic docket, market focus would remain on the upcoming FOMC monetary policy decision on Wednesday, where the central bank is widely expected to raise benchmark interest-rates by 25 bps.

From technical perspective, the pair has managed to defend and rebound from 1.0530-25 historic support, thus, increasing the possibilities of additional recovery ahead of the Fed announcement on Wednesday. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "in the 1 hour chart, the price is holding  now above a modestly bullish 20 SMA, while technical indicators have lost upward strength within positive territory, indicating limited buying interest at current levels. In the 4 hours chart, technical indicators have resumed their declines after a modest upward correction within bearish territory, whilst the intraday advance stalled below the 1.0630 region, where the pair has its 20 and 100 SMAs, level that cap the upside since last Thursday."