EUR/USD losses strength after hitting 1-week highs at 1.1686
- Pair holds bullish bias in short-term, still limited by 1.1680.
- USD falls and then recovers following the release of key details of the US tax reform.
- Key event ahead: decision on Fed Chief and NFP.
The EUR/USD pair reached a fresh 1-week high at 1.1686 boosted by a slide of the US dollar but then pulled back below 1.1680.
Taxes, Fed and NFP
The greenback dropped after House Republicans revealed details about the tax legislation from Trump’s reform. Afterward, as equity prices in Wall Street turned again to the upside, the US dollar recovered some lost ground. Despite moving away from highs EUR/USD is still up for the day, trading above 1.1650, near 1-week highs. Excluding Pound’s crosses, price action remains limited among majors.
Trump is expected to nominate Jerome Powell to replace Janet Yellen in hours. It could become a non-event but Trump’s words could come with surprises. The main event ahead is the US employment report to be released on Friday. Non-farm payrolls are expected to rise by 312K. Also, in the current low volatility environment, the progress regarding the tax reform plan at the US Congress has become an event to watch for traders.
EUR/USD levels to watch
As it has been the case over the week, EUR/USD continues to move with a bullish bias but at a very slow pace. The pair again is facing resistance at 1.1680. If it manages to consolidate on top, it could gain momentum. The next resistance levels might be seen at 1.1700 and 1.1725 (Oct 18 low).
The dominant trend still points to the downside, with the euro unable to make a significant recovery from the 3-month low it reached last week. On the flip side, in the short-term, support might lie at 1.1650 (20-hour moving average) followed by 1.1620 (Oct 31 low) and 1.1590/95 (weekly low).