EUR/USD flat-lined around 1.0650, eyes German ZEW for fresh impetus

The EUR/USD pair extends its overnight side-trend into Asia this Tuesday, as the bears take a breather before the next move lower, with investors gear up for a fresh batch of macro updates from both continents.

The spot reversed sharply from five-week tops after the greenback stalled its corrective bias and regained momentum after the benchmark 10-year treasury yields recovered from lows of 2.56% and jumped back above 2.61% level (near 2-year tops),  as the yields priced-in a 25 bps Fed rate hike. The FOMC begins its 2-day monetary policy meeting today, with the interest rates decision to be announced in the American afternoon tomorrow.

In the day ahead, the EUR/USD pair will remain under pressure as traders prefer to hold the US currency ahead of the FOMC announcements and Dutch general elections due tomorrow. However, losses may be limited amid expectations of upbeat German ZEW surveys and downbeat US PPI data due on the cards later today.

Apart from the data, ECB President Draghi’s speech on "Fostering Innovation and Entrepreneurship in the Euro Area" will be also closely eyed.

EUR/USD Technical Levels   

Valeria Bednarik, Chief Analyst at FXStreet noted, “Around 1.0710, the pair has the 38.2% retracement of the post-US election slide, and investors have been unwilling to push the price beyond it ever since early February, amid political uncertainty at both shores of the Atlantic.”

“Intraday and for the upcoming sessions, the 4 hours chart shows that technical indicators are easing from extreme overbought readings achieved at the beginning of the day, but also that the 20 SMA maintains a strong bullish slope after breaking above the 100 SMA, this last indicating a limited downward scope. A downward corrective movement towards the 1.0630 region seems likely, while a break below this last should favor a deeper downward corrective move,” Valeria added.