EUR/USD drops back towards 1.2025, eyes on US ISM, Fed minutes

• DXY headed to 92 handle?
• Correction likely to extend.
• Focus shifts to the US ISM PMI and FOMC minutes.

EUR/USD pair continues to trade choppy so far this Wednesday, although remains confined within a tight range, with the risk tilted to the downside amid a lack of significant fundamental drivers in the European session.

EUR/USD: NY lows of 1.2026 in sight?

The spot’s corrective slide from four-month tops of 1.2081 is likely to extend further into Europe, as the USD rebound is expected to gain traction, with the European traders seeking to take profits  on their USD shorts ahead of the key risks events for today, the US ISM manufacturing PMI and the FOMC minutes of the Dec  meeting.

Moreover, positive tone seen on the European equities also dents the funding currency Euro, paving the way for a test of NY low of 1.2026. Meanwhile, the latest upbeat German labor market report had little impact on the major, as the USD price-action remains the key driver today.

• German unemployment rate drops to a record low.
• German unemployment change for Dec came in at -29k vs. -13k expected and -20k previous.

EUR/USD Technical Levels

Haresh Menghani, Analyst at FXStreet noted: “With short-term indicators gradually moving into near-term overbought conditions, the up-move might continue to confront some fresh supply near the 1.2080-90 region. Any subsequent momentum seems more likely to be capped near 1.2160-65 zone. On the flip side, corrective slide below 1.2030-35 resistance turned support might prompt some additional profit-taking slide back below the key 1.20 psychological mark towards an important horizontal support near the 1.1950-45 region.”