EUR/USD extends ECB story-led rebound into Asia

After having managed to settle Tuesday above 1.12 handle, the EUR/USD pair extends its rebound into the Asian trades this Wednesday, as the bulls digest the ECB taper talks amid broad based US dollar correction.

EUR/USD supported at 1.1200

Currently, EUR/USD trades +0.14% higher at t 1.1220, having posted session highs at 1.1229 in the last hour. The main currency pair remains well bid and now looks to retest 1.1250 barrier, in wake of a minor-correction attempted by the greenback across the board, after having reached fresh two-month tops yesterday on the back of rising odds of a Fed rate hike in Dec. The Fed fund rates futures point to a 61% probability of a rate hike in Dec.

The EUR/USD pair staged a solid 100-pips reversal on Tuesday after Bloomberg reported a story, quoting unnamed ECB official saying that the ECB is near to consensus to taper is bond-buying programme before it ends. Although the ECB quickly said that the bank won’t comment on the speculation. Draghi made clear at the last ECB meeting that tapering hasn’t been discussed.

Looking ahead, the bulls are expected to remain underpinned as dust settles over the ECB story, while investors turn their attention towards a flurry of Eurozone final services PMI reports, US ADP jobs report and ISM services PMI reading for further USD moves.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.1251 (Sept 30 high). A break beyond the last, doors will open for a test of 1.1286 (Sept 15 high) and from there to 1.1300 (round figure). On the flip side, the immediate support is placed at 1.1171 (100-DMA) below which 1.1145 (static support) and 1.1119 (Sept 21 low) could be tested.