EUR/USD: Corrective slide to extend as DXY re-takes 93.00

Having failed to sustain the rally above the 1.19 handle, the EUR/USD pair extended its overnight corrective slide into Asia, as investors seek to take profits off the table ahead of the key US macro releases due on the cards later today.

EUR/USD hovers near daily pivot of 1.1870

The spot is seen flirting with daily lows of 1.1869, as the bulls face exhaustion after the recent upsurge to highest levels since Nov 26^th at 1.1902. The broad-based US dollar recovery from three-week lows gains traction in Asia, as traders unwind their USD shorts in a bid to clear out positions ahead of a fresh batch of key US economic data slated for release today.

Moreover, markets remain hopeful that the House Republican leaders would manage to pass a stop-gap bill to avert a partial government shutdown on Saturday, which further provided extra legs to the USD recovery seen so far this session.

In the day ahead, the EUR/USD pair could extend its correction, as yesterday’s downbeat German PPI and Eurozone current account data continue to still weigh on the EUR, keeping a check on further upside. Also, the spot will remain at the mercy of the USD dynamics in absence of fresh catalysts seen from the Euroland today while the Catalan election will remain in focus for fresh take on the EUR.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, explained: “In the 4 hours chart, technical indicators lost upward strength but remain near overbought readings, whilst the price extended above all of its moving averages, with the 20 SMA now heading higher but the longer ones still flat. The pair will need to retreat well below 1.1860 now to lose the upward potential but seems unlikely it will easily return to sub-1.18 levels these days. Support levels:  1.1860 1.1830 1.1800. Resistance levels: 1.1900 1.1940 1.1975.”