EUR/USD: Further downside in play ahead of US data?

The bears continue to fight for control in the Asian trades this Wednesday, leaving the EUR/USD pair largely depressed below 1.1800 levels.

EUR/USD: Focus shifts to US data

The EUR/USD pair traded choppy on the hawkish remarks from the Fed Chair Yellen, before meeting fresh supply above 1.18 handle in the overnight trades. The spot now remains better offered amid a broad bid US dollar, in response to the ‘hawkish catch’ delivered by Yellen and on the latest news that Trump is likely to announce a cut in corporate tax to 20%.

The US dollar caught a fresh bid-wave across its main competitors after Yellen sounded a bit more hawkish than her peers during her overnight speech, citing that the Fed should be wary of moving too gradually. Treasury yields also keep the positive tone intact, with the shorter duration yields up nearly 1% on the hawkish rhetoric.

Meanwhile, the Euro remains undermined amid divergent monetary policy outlook, as the ECB President Draghi and his company have so far failed to provide anything concrete on the QE tapering, while expressing their concerns on the inflation outlook.

Also, the German election setback continues to add weight on the major, leaving the rate exposed to further downside risks, as investors gear up for the key US durable goods data due later today, which is expected to show a solid rebound in August. Besides, speeches by the FOMC members Bullard and Brainard will be also closely heard.

EUR/USD Technical Set-up  

Valeria Bednarik, Chief Analyst at FXStreet, argued: “In the 4 hours chart, the 20 SMA has already crossed below the 100 SMA and points to do the same with the 200 SMA, this last in the 1.1890 region, reflecting the strong selling momentum that would likely extend over the upcoming sessions, as long as selling interest contains upward corrections in the 1.1820/30 region. Further declines will expose 1.1661, August monthly low. Support levels: 1.1760 1.1730 1.1695 Resistance levels: 1.1825 1.1850 1.1890.”