EUR/USD headed to 1.1750 on political uncertainty, ZEW eyed

The EUR/USD pair extends its retreat from two-week tops into a fourth day today, as uncertain political environment around the EU continues to dampen the sentiment around the Euro.

EUR/USD awaits fundamental drivers

The spot remains vulnerable amid rife political jitters, in the wake of Catalonia stand-off and Merkel defeat in the lower Saxony regional election.

The Catalan leader Puigdemont failed to offer clarity on his independence campaign yesterday, following which the Spanish government has offered him some time until Thursday to decide on whether he wants to declare independence or not.

On the other side, Germany's Social Democrats (SPD) beat Angela Merkel's Conservatives in a vote in the northern state of Lower Saxony on Sunday, implying Merkel’s weaker stance on the coalition talks, following last month’s disappointing election outcome.

More so, renewed upside seen in the US dollar in the overnight trades, tracking higher Treasury yields after the reports cited that the US President Trump was impressed by with Stanford University economist John Taylor and hence, Taylor could be the next Fed Governor. Taylor is known for his hawkish tilt on the monetary policy.

Moving on, focus now remains on the economic releases for fresh impetus on the major, with the German ZE surveys and Eurozone final CPI report eagerly awaited. Meanwhile, the US industrial output and Fedspeaks will emerge the market movers in the American session.

EUR/USD Technical View

Haresh Menghani, Analyst at FXStreet notes: “From a technical perspective, the pair is currently placed near its immediate support near the 1.1780-70 region, marking 23.6% Fibonacci retracement level of its recent slide from 1.2092 to 1.1669. A clear break below the mentioned support would confirm a fresh bearish break down and turn the pair vulnerable to head back towards retesting the 1.1700 handle with some intermediate support near mid-1.1700s.” 

“On the flip side, 1.1800 handle now seems to act as immediate resistance and any subsequent recovery attempts might now be capped at 38.2% Fibonacci retracement level near the 1.1830 region,” Haresh adds.