/EUR/USD reverses sharply from 1.2475, EZ data eyed | by Dhwani Mehta | FXStreet

EUR/USD reverses sharply from 1.2475, EZ data eyed | by Dhwani Mehta | FXStreet

Eurozone inflation concerns capping the upside in the EUR. Awaits Eurozone sentiment/ confidence numbers for next leg higher. The EUR/USD pair broke its bullish consolidative mode to the upside and went onto hit fresh monthly tops at 1.2477 before meeting fresh supply on resurgent USD buying across the board, which sent the rates back below the midpoint of the 1.24 handle. The USD bulls regained the recovery momentum, as the risk-on rally in the European equities boosted the demand for the higher-yielding Treasury yields. The USD index bounced-off lows of 88.53 levels to now trade +0.11% higher near session tops of 88.79. Meanwhile, softening inflationary pressures in the Euro area, especially after the decline in German import prices and Spanish flash CPI figures, fuel renewed concerns for the European Central Bank (ECB) and added to weight on the common currency. Also, the latest remarks from the ECB Governing Council member Liikanen, stating that the central bank needs to be patient with tightening on the back of lower-than-expected underlying inflation, hit the sentiment around the Euro further. Looking ahead, the spot may come under further selling pressure and could test the 1.24 handle on a string of downbeat Eurozone economic sentiment and consumer confidence indices due for release shortly. EUR/USD levels to watch FXStreet’s Analyst Haresh Menghani notes, “From a technical perspective, Monday’s bullish momentum seems more likely to get extended further towards the key 1.2500 psychological mark, representing the top end of a nearly 2-1/2-month-old trading range. A convincing move beyond the mentioned barrier would suggest a fresh bullish breakout and pave the way for a resumption of the pair’s bullish trajectory.”  “On the flip side, any meaningful retracement now seems to find immediate support near the 1.2410-1.2400 region, below which the pair could head back towards retesting the descending trend-line resistance break-point, now turned support, currently near the 1.2360-55 zone,” Haresh adds.