EUR/USD finds some support near 1.1400 handle, focus remains on FOMC

08 Nov 2018

   •  Resurgent USD demand triggers the initial leg of the intraday slide.
   •  Italian worries exert additional pressure on the shared currency.
   •  The latest FOMC policy update eyed for some fresh impetus.

The EUR/USD pair faded a minor uptick to an intraday high level of 1.1445 and was now seen extending overnight retracement slide from over two-week tops. 

After consolidating through the Asian/early European session, the pair met with some fresh supply and the initial leg of downtick was triggered by a strong follow-through US Dollar buying interest. 

With investors looking past the US midterm election results, the greenback pulled away from 2-1/2 week lows, set on Wednesday, and was further supported by a mildly positive tone around the US Treasury bond yields. 

Meanwhile, concerns over Italy's debt situation amid a dispute with the European officials over its budget spending plans exerted some additional downward pressure on the shared currency and further collaborated to the pair's slide back closer to the 1.1400 round figure mark. 

As Yohay Elam, FXStreet's own Analyst writes: “Italy is preparing its response to the European Commission's rejection of its budget. An answer is due by November 13th. In the meantime, Italy's coalition parties, the 5-Star Movement and the League are embroiled in a clash over migration policies. Political analysts see a potential for a collapse of the government and early elections in the euro zone's third-largest economy.”

The downfall, however, remained cushioned, at least for the time being, with the pair quickly rebounding from the 1.1400 handle as market participants seemed reluctant to place aggressive bets ahead of the upcoming FOMC monetary decision, scheduled to be announced during the US trading session.

Technical levels to watch

Yohay explains: “1.1395 is the low point seen on Wednesday, and it is also very close to the SMA 50. 1.1355 was a swing low early in the week. 1.1330 was a trough in late October. Finally, 1.1300 is a critical double bottom.”

“1.1455 was the peak in early November. 1.1500 is not only a very round number but also the high point on Wednesday and where the 200 SMA is at the moment,” he added further.

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