EUR/USD: testing key resistance with eyes for 1.1235

Currently, EUR/USD is trading at 1.1180, up 0.14% on the day, having posted a daily high at 1.1206 and low at 1.1109.

EUR/USD is inching higher with a test of the 1.1180 resistance in a full recovery of the downside and comments from ECB President Draghi yesterday. He stressed that, despite reduced downside risks facing the Eurozone economy, an extraordinary accommodation was still required.

More generally, "Greece (German press speculation – denied by the Greek government – that it may forego its next debt repayment) and Italy (movement toward an agreement on a new electoral law that may pave the way for a snap election) are back on the radar," explained analysts at Scotiabank.

From data, the euro was still able to recover after the German state CPI data that reflected weak price pressures.

Today's US consumer confidence fell again, and analysts at ING explained that this was possibly reflecting the lack of headway being made on Presidential promises at a time when real incomes are being squeezed - ( - 102.6 down from 105.4 last month. Note the present situation component was little changed).

"At the moment, the aggregate readings remain close to cyclical highs and it is higher than before the Presidential election. However, the momentum is shifting towards ebbing confidence with the concern that this could translate into softer consumer spending growth in coming months and quarters,' explained the analysts.  

In today's US session, we also had the core PCE index that came in line with expectations at 1.5% from previous 1.6% - not enough to slow up the bid. Also, Fed Governor Lael Brainard crossed the wires, via Reuters, saying that another U.S. rate hike would be appropriate soon - still euro is bid. 

US NFP: We expect a 185K reading - Wells Fargo

Eyes are now focussed on next week's ECB and the rest of this week's US data, namely nonfarm payrolls at the end of the week which could decide the fate of the dollar until the FOMC meeting through the Fed speak black out. However, the ECB will be traded with caution and analysts at Nomura suggested to buy on dips and not to get too carried away with the idea that the ECB will be tapering by too much anytime soon. 

ECB: will market expectations be too high? - Nomura

EUR/USD levels

Analysts at Commerzbank explained that rallies will find interim resistance at 1.1235 ahead of 1.1268 and 1.1300. "Above 1.1300, the market has potential in reaching the highs from mid 2016 circa 1.1400, however, we believe it will struggle here from a longer term perspective. We note the 78.6% retracement lies at 1.1343."

To the downside, and in the longer run, Valeria Bednarik, chief analyst at FXStreet explained that the pair retains the bullish stance, although only with an advance beyond 1.1200 the pair can be poised to advance further. "Below the mentioned daily low on the other hand, the pair has a strong support at 1.1075, the lowest in these last three weeks, with a break below it opening doors for a steeper decline towards the 1.1020/30 region."