EUR/USD weaker near 1.1650 amid notable USD demand

• USD bounce short-lived?
• Finds stiff resistances near 1.1685/90 region.
• Eyes on CB-speaks, US tax reform debate, and US inflation.

The EUR/USD pair consolidates its Asian recovery from a dip to 1.1645 lows, as the bulls struggle to take on the recovery above 1.1660 levels amid notable USD demand across the board.

EUR/USD supported at 5-DMA of 1.1644.

The spot is seen trading on a cautious footing, as a lack of significant fundamental drivers leaves the rates at the mercy of the USD dynamics. The US dollar staged a tepid rebound in the Asian trades, which capped the recent EUR/USD corrective rally near 1.1670 levels. Subsequently, the major dropped back to test the 5-DMA support on renewed USD demand, spurred by aggressive selling seen in GBP/USD on the revival of concerns surrounding the UK PM May’s leadership.

However, the losses remain limited by the cross-driven strength, with the EUR/GBP cross rallying nearly 0.50% to 0.8890 levels. Meanwhile, negative Treasury yields amid lingering concerns over the US tax reforms, in the wake of key differences propping between the Senate Republicans and House, lend some support to the pair.

Later this week, markets look forward to some clarity on the US tax reform plan and key macro news from the US and EUR docket amidst a speech by the Fed Chair Yellen at the ECB conference.

EUR/USD Technical Levels

Jim Langlands at FX Charts noted: “A topside break of 1.1675 would trigger stops and could see a run back to 1.1720 where the 100 DMA will provide stern resistance, but above there could see a bigger squeeze towards the descending trend resistance at around 1.1775. On the downside, support will today be seen at 1.1620 and again at around 1.1580/85, where the rising trend support also lies. Below there, the trend low at 1.1553 and the Fibo level at 1.1510 will come into play although probably not today.”