EUR/USD takes a U-turn, drops to 1.1850 on fresh USD demand

The EUR/USD pair resumed its corrective slide from more-than two year tops, and now breaches 1.1850 levels, after having failed to sustain the pullback above 1.1900 levels.

EUR/USD unimpressed by solid EZ CPI report?                       

After a brief phase of downside consolidation, the EUR bears lost strength on better-than expected Eurozone CPI release, sending the EUR/USD pair back to test daily tops just ahead of 1.19 handle.

However, the recovery attempt in the spot remained short-lived, as the bears regained poise, triggering a fresh sell-off to near mid-1.18s. The latest leg lower in EUR/USD can be mainly attributed to a fresh bout of buying interest seen around the US dollar, when compared to its six major rivals.

Meanwhile, the USD index jumps to four-day tops of 93.15, up +0.30% on the day, as the latest set of upbeat US macro news continue to underpin the sentiment.

Moreover, a risk-on rally seen in the European equities also adds to the renewed weakness in the major, as it weighs negatively on the low yielding currencies such as the Euro.

Looking ahead, the pair will take cues from the US core PCE price index, jobless claims and pending home sales data for further momentum.

EUR/USD Technical Set-up  

The pair remains exposed to further downside risks, as explained by Valeria Bednarik, Chief Analyst at FXStreet, “break above 1.1910/45 pivots is needed to generate firmer bullish signal. Otherwise, the downside is expected to stay at risk and violation of 10SMA would trigger deeper pullback and expose next supports at 1.1812 (20SMA) and 1.1791 (30SMA). Res:  1.1910; 1.1945; 1.1984; 1.2000 Sup:  1.1859; 1.1812; 1.1791; 1.1773.”