EUR/USD retreats from highs, back below 1.1700

After a test of fresh YTD tops just above 1.1710, EUR/USD has now lost some impetus and is now returning to the 1.1690/80 band.

EUR/USD in fresh 2-year tops

A wave of selling pressure around the greenback helped the pair to briefly surpass the critical 1.1700 and clock fresh 2-year tops just above 1.1710 and a tad below the key level at 1.1716 (monthly high August 2016).

In addition, auspicious prints from July’s IFO in Germany also lent some fresh legs to the EUR-rally, which remains (very) well underpinned by speculative positioning, futures markets and options and the likeliness of ECB ‘tapering’ at some point in the next months.

However, the upside impetus seems to have run out of steam soon afterwards, prompting spot to deflate from above 1.1700.

Furthermore, upbeat results from US consumer confidence and the Richmond Fed index gave some much needed oxygen to the buck, collaborating with the drop from daily highs and encouraging the US Dollar Index to mildly bounce off fresh 2017 lows near 93.50.

Later in the session, USD should stay under pressure, as Republicans will attempt to vote on the so-called ‘Trumpcare’, with results expected after the NA close or during the Asian session.

EUR/USD levels to watch

At the moment, the pair is gaining 0.30% at 1.1678 and a breakout of 1.1712 (2017 high Jul.25) would target 1.1713 (monthly high Aug.24) and then 1.1800 (psychological level). On the other hand, the immediate support aligns at 1.1542 (10-day sma) followed by 1.1477 (low Jul.20) and finally 1.1465 (21-day sma).