EUR/USD consolidates the bullish opening gap, 1.0875 eyed

After having managed to close at 1.0800 levels last week, the EUR/USD pair ran through a fresh buying-wave and opened Asia Monday with a 40-pips bullish gap, as the Asian traders sold-off the buck in a reaction to the weekend’s news of the Trumpcare bill failure to seek the House approval.

The healthcare failure raised questions on Trump's ability to deliver on his campaign promises and also on the Republican Party to capacity to govern effectively, thereby rattling investors’ confidence and triggered risk-off moods across the boards, with the greenback diving across the board alongside the treasury yields.

Moreover, reports of German Chancellor Angela Merkel’s party victory in elections in the western state of Saarland, also emerged in favor of the euro, adding to the further upside in the EUR/USD pair.

Looking ahead, we have an eventful, with a bevy of Fed speakers on the cards apart from a host of crucial macro releases from both continents. In the meantime, focus now shifts to the German Ifo Business climate data and FOMC member Evans speech due later today.

EUR/USD Technical Levels   

Valeria Bednarik, Chief Analyst at FXStreet noted, “he EUR/USD pair has been contained by a major mid-term resistance, the 1.0820 level which represents the 50% retracement of the post-US election's decline, although pullbacks from the area have been quite shallow, which implies a high risk of a bullish breakout. In the daily chart, the Momentum indicator maintains its bullish slope, now within overbought territory, whilst the RSI indicator consolidates around 62, reflecting the latest range-bound trading.”

“In the same chart, the 20 DMA heads north below the current level after crossing above the 100 DMA, all of which supports additional advances, particularly on an upward extension beyond the 1.0820/30 region. Shorter term, the 4 hours chart shows that the price has settled a few pips above a horizontal 20 SMA, whilst technical indicators lack directional strength, also reflecting the latest lack of directional strength rather than suggesting buying exhaustion.” Valeria added.