EUR/USD off-highs, flat-lined around 1.0630 ahead of ZEW

The EUR/USD regains poise and now extends the upside in a bid to reclaim 1.06 handle, in wake of broad based US dollar correction and poor sentiment around the European stocks.

EUR/USD flirting with lows

Currently, EUR/USD trades -0.07% lower at 1.0631, clinging to 20-DMA support located at 1.0627.  The main currency pair failed several attempts to take on its overnight recovery beyond the mid-point of 1.06 handle, and traded in the lower bound of today’s trading range almost throughout the Asian session, in wake of returning demand for the US currency heading into a two-day FOMC meeting starting later in the American session.

Moreover, the EUR/USD squeeze witnessed yesterday was largely on the back of profit-taking in the USD long positions, as markets sought to liquidate their positions before the much-awaited FOMC interest rates decision due to be announced Wednesday.  

Later today, the spot will get influenced by the German ZEW economic surveys, with the headline economic sentiment figure for Dec expected to improve to 14.0 versus 13.8 last.  While we have a second-tier data in the import prices from the US docket.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0647 (10-DMA). A break beyond the last, doors will open for a test of 1.0683 (daily R1) and from there to 1.0700 (round figure). On the flip side, the immediate support is placed at 1.0627 (20-DMA) below which 1.0600 (zero figure/ 5-DMA) and 1.0567 (Nov 18 low) could be tested.