EUR/USD risks correction as USD selling looks overdone

The EUR/USD pair extended its overnight side-trend into Asia on the final trading day of the week, as the bulls appear to face exhaustion after the extensive rally to thirteen-month tops of 1.1445.

EUR/USD awaits German retail sales and US data flow

The spot pauses a 3-day bullish run, consolidating the recent heavy gains, as the bulls turn cautious and remain in a wait-and-see mode before attempting another run towards 1.15 handle.

Markets believe that the recent USD selling is overdone and hence, the EUR/USD pair risks correction, as they could resort to profit-taking on their USD shorts, in the wake of monthly as well as quarterly closing.

The EUR/USD pair has gained nearly 330 pips over the last 10 trading sessions, as broad based US dollar slump extended on the US Healthcare vote delay and narrowing monetary policy divergence, after the ECB President Draghi’s hawkish remarks at the ECB Symposium.

Calendar-wise, the German retail sales data will be reported ahead of the European open, while the German jobs data combined with the Eurozone flash CPI estimate will fill up the European session. Later in the NA session, the US core PCE price, personal spending and consumer sentiment data will provide fresh trading impetus to the buck.

EUR/USD Technical Levels

According to Matias Salord, Analyst at FXStreet: “If the EUR/USD continues to rise it will reach the 1.15 handle. Above at 1.1530 could face a strong barrier. If it climbs further the 2016 high (1.1615) will be on the radar.  To the downside, a decline under 1.1400 (psychological / 20-hour moving average) could favor some stabilization or a modest correction. The upward trend is likely to remain with momentum as long as price holds above 1.1280.”