EUR/USD attempts tepid bounce near 1.2365 ahead of German ZEW

• USD buying remains unabated.
• Sell the rallies above 1.2400?
• All eyes on Germany’s ZEW.

The EUR/USD pair is seen making minor-recovery attempts from a brief dip below the midpoint of the 1.23 handle, as the bears take a breather ahead of the German ZEW economic surveys.

EUR/USD reverts 10-DMA at 1.2367

The spot extended its bearish momentum for the third straight session and went on to hit fresh four-day troughs at 1.2346, mainly in response to the ongoing upward correction in the US dollar against its main competitors.

The strengthening sentiment around the greenback is largely due to the renewed buying interest seen around Treasury yields, especially with the shorter-duration Treasury yields outperforming in anticipation of hawkish FOMC minutes due to be published later on Wednesday. The USD index jumps +0.40% to 89.44, having posted multi-day tops of 89.55 while 2-year Treasury yields trade near the highest levels seen in a decade at 2.248%.

However, over the last hour, the major stalled its downward spiral and swung back towards the 10-DMA support-turned-resistance of 1.2367, as cautious sentiment prevalent around the European equities lift the demand for the funding currency EUR.  

Meanwhile, markets remain expectant of a positive surprise in Germany’s ZEW economic sentiment surveys, especially after upbeat German PPI figures, which in turn offers some respite to the EUR bulls.

GBPUSD levels to watch

Karen Jones, Analyst at Commerzbank, notes: “Intraday rallies are indicated to fail circa 1.2425. Nearby support is now 1.2165, the 18th January low, this guards the 2017-2018 uptrend, which lies at 1.2044 and a close below here will be needed to confirm the end of the move higher. Above the 2008-2018 resistance line at 1.2680 would target 1.3190 the 50% retracement of the move down from 2008”.