EUR/USD: Bulls regain poise, flirts with 1.1850

• USD trades listless, awaits US House tax re-vote.
• Focus on the US House tax re-vote.

The EUR/USD pair is seen flirting with daily tops near the midpoint of the 1.18 handle, as the bulls fight back control amid a broadly subdued US dollar and moderate risk-aversion.

EUR/USD supported at 1.1830

The spot quickly reversed a dip to near 1.1830 region in early trades, now looking to extend the recent bullish momentum towards 1.19 handle, as the US dollar remains on the defensive against its main competitor, as the US political headlines continue to drive the market sentiment. The US tax reform bill is sent back to the House for the approval after it got passed by the Senate earlier on the day.

Trump to hold a news conference at 2100 GMT if House approves final tax bill vote

Moreover, the greenback trades listless also as it tracks the 10-year US-German yield spread, which trades flatlined, despite the US tax reform optimism.  The USD index trades flat near the 93 handle, as Treasury yields turn back into the red zone.

Additionally, the funding currency, EUR, also got a fresh boost from the negative trading seen in the European indices, which refuelled risk-off sentiment, Markets also remain jittery ahead of Christmas and Year-end holidays, and hence, refrain from placing any directional bets on EUR/USD, leaving the rates in the familiar range above 100-DMA placed at 1.1808.

However, downbeat German IFO business climate numbers combined with Eurozone political instability, in the wake of the Spanish and German political scenario, could keep the gains in check. Meanwhile, a bigger-than-expected drop in the Eurozone current account surplus also limits further upside in the main currency pair.

Focus now shifts towards the ECB policymaker and German Bundesbank Chief Weidmann’s speech and the US existing home sales release for fresh momentum.

EUR/USD Technical Levels

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, explained: “Cloud top now acts as support, with daily MA’s in bullish setup and slow stochastic heading north and signaling room for extension towards Fibo barriers at 1.1867 (Fibo 61.8% of 1.1961/1.1717) and 1.1900 (Fibo 76.4%). A sustained break above 1.1900 would open the way for full retracement of 1.1961/1.1717 downleg. Daily cloud top should ideally keep the downside protected, however, deeper corrective attempts are expected to hold above 1.1800 handle (broken 100SMA) to keep bulls in play. Res: 1.1848; 1.1867; 1.1900; 1.1940
Sup: 1.1823; 1.1800; 1.1786; 1.1762.”