EUR/USD finds support near 1.18 handle after Spanish PM Rajoy’s presser

The EUR/USD pair's sharp retracement from 50-day SMA caught some fresh bids, prompting a quick recovery of around 15-20 points from the 1.18 neighborhood.

The pair retreated around 40-pips from 2-week tops as the Spanish PM Mariano Rajoy's post-emergency cabinet meeting press conference got underway. Rajoy formally demanded a clear statement from the Catalan leader to clarify whether independence has been declared. 

Meanwhile, the pull-back remained limited as investors look forward to any other measures, including suspending the autonomy of Catalonia could be taken under Article 155 of the constitution, are taken by the Spanish government. 

However, a sharp recovery in the US Treasury bond yields, which helped the US Dollar to recover majority of its early lost ground kept a lid on any further up-move, with the pair now consolidating in a range around the 1.1815 region.

Apart from the ongoing political drama in Spain, today's release of the key FOMC meeting minutes would play an important role in determining the pair's next leg of directional move.

   •  FOMC minutes to reflect the debate among participants about recent inflation - Nomura

Technical levels to watch

Immediate resistance remains near the 1.1845-50 region (50-day SMA), above which a bout of short-covering could lift the pair beyond the 1.1900 handle towards its next major hurdle near 1.1940 level.

On the downside, a decisive break below the 1.1800 handle is likely to accelerate the fall towards 1.1760 horizontal support before the pair eventually drops to retest the 1.1700 round figure mark.