EUR/USD off lows, but capped below 1.2350 ahead of Fedspeak

• MonPol divergence, risk-on cap the upside.
• Awaits fresh direction on the ECB monetary policy decision.

The EUR/USD pair found fresh buyers once again near the 1.2330 region, as upbeat Eurozone retail PMI reading and broad USD weakness continue to offer some support. However, further gains appear restricted amid a risk-on rally in the European equities, backed by easing fears of a potential global trade war on Trump’s tariffs.

Also, increased cautiousness ahead of the ECB monetary policy decision due this Thursday, keeps the bulls on the back foot. The ECB is widely expected to disappoint the hawks, as inflation remains a major concern amongst the policymakers, against the backdrop of looming trade war concerns and possible retaliatory actions from the European authorities.

Meanwhile, the focus now shifts towards the US Fedspeak and factory orders data due later today for near-term trading impetus, as the dust settles over the Italian political woes.

EUR/USD levels to watch

The AceTrader Research Team, notes: “Euro's rebound from 1.2269 (Europe) to 1.2349 in New York suggests pullback from yesterday's 10-day high at 1.2365 has ended and early upmove from last Thursday's 7-week trough at 1.2155 would resume after consolidation, near-term loss of upward momentum may cap the price at 1.2412/15. On the downside, only a firm break below 1.2300 would prolong choppy sideways swings and may risk another retreat towards 1.2269 before prospect of another rebound later today or tomorrow.”