EUR/USD heading back towards 1.1900 ahead of US CPI

• Choppy, but within range amid holiday-thinned light trading.
• 1.1850 support area holds the key as US dollar takes a breather.

The EUR/USD pair extends its choppiness into the European session, although manages to maintain its 30-pips trading range amid lack of fresh fundamental catalysts.

EUR futures: further downside unlikely

A phase of bullish consolidation in the US dollar across its main competitors after yesterday’s extensive rally to fresh 4.5 month tops, also helps the spot to attempt a tepid recovery from multi-month troughs reached at 1.1823.  

The greenback rallied hard a day before, in response to the US President Trump’s decision to pull the US out of  Iran’s nuclear deal.

All eyes now remain on the Bank of England (BOE) monetary policy decision for any ‘rub-off’ effect on the EUR. Later today, the US inflation report could provide fresh legs to the US dollar rally, should the consumer prices tick higher in the reported month.

EUR/USD Technical Levels

Slobodan Drvenica at Windsor Brokers notes, “overall structure remains bearish and favors further weakness for a test of the initial target at 1.1790 (Fibo 76.4% of 1.1553/1.2555 ascend), with extension towards next key support at 1.1709 (Fibo 38.2% of 1.0340/1.2555 rally).
Meanwhile, the pair may bounce higher on positioning for fresh weakness, as 14-d momentum turns higher and provides a positive signal. Initial resistance lies at 1.1936 (broken Fibo 61.8% of 1.1553/1.2555 upleg), with falling 10SMA (1.1960) expected to cap upticks and keep bears intact.”