EUR/USD retreats from yearly tops as USD selling abates

The greenback selling interest seems to have abated, with the EUR/USD pair reversing majority of its early gains to yearly tops near mid-1.0900s and refreshing session lows near 1.0915 region.

Continuous up-surge in the US treasury bond yields, amid renewed optimism around the US President Donald Trump's expected tax reforms announcement, helped the key US Dollar Index to bounce off lows and prompted traders to take some profits off the table. 

With markets pricing-in Emmanuel Macron's victory in the second round on May 7, investors also seemed to lighten their bullish bets heading into the key ECB monetary policy decision on Thursday, especially after the post-French election up-surge of over 200-pips. 

With no relevant fundamental drivers, in-terms of market moving economic releases from Euro-zone or from the US, market participants keenly await details over Trump's promised package to overhaul the US tax code, expected to be announced later during the day.

Technical levels to watch

Immediate support is pegged at the 1.0900 handle, below which the pair is likely to extend the corrective slide towards the very important 200-day SMA support near 1.0850-40 region before eventually breaking below 1.0800 mark and head towards testing a previous resistance, now turned support near 1.0775-70 area.

On the upside, mid-1.0900s now seems to have emerged as immediate strong hurdle, which if conquered should pave way for continuation of the pair’s near-term upward trajectory, initially towards the key 1.1000 psychological mark ahead of 1.1025-30 horizontal resistance.