EUR/USD: 1.1760 – a tough nut to crack, US CPI, Fed eyed

• DXY forms a Doji candle on daily sticks.
• Ignores upbeat Eurozone industrial production.
• The US CPI, Fed eyed for fresh direction.

The EUR/USD pair rose for the first time in nine trading sessions on Wednesday, staging a tepid comeback from three-week lows of 1.1718, mainly driven by a corrective move lower seen in the US dollar against its main competitors.

The sentiment around the greenback was broadly hit by the renewed concerns over the US tax bill passage, after a Democratic win in Alabama threatened the Trump’s administration’s reform plans.

Over the last hours, the spot trades flat-lined near the mid-point of 1.17 handle, with the upside capped by the stiff resistances located at the 5-DMA barrier near 1.1760 levels.

To the downside, the buyers continue to lurk near 1.1740 region amid expectations of a hawkish Fed monetary policy statement and upbeat economic projections due on the cards later in the American afternoon.

In the meantime, the major awaits the US CPI data for fresh trading impetus, as the German final CPI and Eurozone industrial production data were largely ignored by the EUR traders.

On the US CPI report, the research team at Lloyds Bank, noted: “The sharp rise in the oil price during the month, along with higher food prices looks likely to have led to a big rise in the ‘headline’ reading for November. We expect a monthly increase of 0.4% taking the annual rate to 2.0%.”

EUR/USD Preferred Strategy

Valeria Bednarik, Chief Analyst at FXStreet, explains: “The pair remains technically bearish according to readings in the 4 hours chart, as indicators hold below their mid-lines, although with no directional strength. In the same chart, a bearish 20 SMA capped intraday recoveries, while the price is now hovering around a horizontal 200 SMA. The main support comes at 1.1712, November 21st daily low, followed by a strong static level at 1.1660. A break below this last could lead to a test of 1.1620. To the upside, 1.1800 is the main resistance, as the pair has there the 61.8% retracement of its latest bullish run, and its 100 DMA.  Above it, the recovery can continue up to the 1.1830/60 price zone.”