EUR/USD REVERSES A DIP TO 1.1735 POST-ECB PRAET COMMENTS

• Sellers return as ECB Praet downplays Draghi’s hawkish comments.
• US dollar to gain ground on MonPol divergence ahead of Fed decision.

The EUR/USD pair stalled its bullish momentum and rapidly eroded 40-pips, after the Euro came under aggressive selling pressure, in a knee-jerk reaction to the latest comments delivered by the ECB Chief Economist Peter Praet.  

Praet poured called water on Draghi’s hawkish comments delivered on Monday, by saying that Draghi’s comments overnight weren’t anything new. The ECB President said that the underlying inflation pressures picking up at an Economic forum.

On the US-side of the equation, the US dollar buyers are seen trying to recover ground across the board, underpinned by the divergent monetary policy outlooks against major global central banks, as the Fed looks set to hike rates tomorrow by 25 bps. The USD index bounces-off lows at 94.14 and reverts closer to the daily tops at 94.37.

However, the pair appears to find some fresh bids near 1.1735 region, now attempting a bounce back towards the 1.18 handle, as attention turns towards the US CB consumer confidence numbers for fresh trading impetus.

EUR/USD Technical Levels

According to Slobodan Drvenica at Windsor Brokers, “Tuesday's Doji with long upper shadow could be a negative signal, as bulls repeatedly failed to clear 1.18 barrier and also failed to close above 1.1780 (Fibo 38.2% of 1.2555/1.1300) , with weakening momentum and south-turning slow stochastic, after forming bearish divergence, weighing on near-term action. The bearish scenario requires confirmation on close below 1.1700 support (rising 10SMA / Fibo 38.2% of 1.1526/1.1815 upleg) to open way for deeper pullback. Bullish bias is expected to remain intact while the price holds above 1.1724 (Tuesday's low) with renewed attempts at 1.18 zone to be anticipated, but stronger action could be expected after Fed announces its decision on Wednesday. Res: 1.1800; 1.1815; 1.1848; 1.1900. Sup: 1.1724; 1.1700; 1.1670; 1.1659”.

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