EUR/USD clings to gains near 3-month tops, German CPI in focus

   •  Weaker US bond yields add to bearish USD sentiment. 
   •  Bulls eyeing German CPI for fresh impetus towards 1.20 handle.

The EUR/USD pair broke out of its Asian session consolidation phase and refreshed multi-month tops in the last hour, albeit quickly retreated few pips thereafter. 

Broad-based US Dollar weakness, which has been a key theme in the FX market over the past few sessions, kept pushing the pair higher through the mid-European session on the last trading day of the year. 

A mildly weaker tone around the US Treasury bond yields added to the USD woes and provided an additional boost to the pair's up-move. Mario Blascak, European Chief Analyst at FXStreet notes: "The US Dollar is trading broadly weaker at the end of 2017 as the 10-year US Treasury bond yields are trading 6-8 basis points lower compared to a week ago".

Bulls now seemed to take a breather and look forward to the flash German CPI print for fresh impetus. The overall German inflation numbers are due for release at 1300 GMT, with consensus estimates pointing to a stronger m-o-m reading. 

The yearly print, however, is likely to show a slight deceleration but seems unlikely to hinder the pair's bullish run-up amid pre-holiday thin liquidity conditions and empty US economic docket.

Technical outlook

Blascak writes: "Technical oscillators turned higher with Momentum indicator pointing upwards with plenty of room on the upside. Also, the Relative Strength Index has room to go on its upward crawl. With the uptrend on EUR/USD gaining further Momentum, the EUR/USD is likely to ignore the bearish crossover on Fast Stochastics similar to July-August period when EUR/USD rose from $1.1300 to $1.1900 ignoring multiple bearish crossovers on Fast Stochastics."