EUR/USD rises toward mid-1.19s as DXY drops below 92

After spending the majority of the day in a narrow band below the 1.19 handle, the EUR/USD pair gained traction in the last hour and started to erase its sharp losses from Wednesday. As of writing, the pair was trading at 1.1937, gaining 0.37 on the day.

This recent upsurge seems to be a product of the greenback's weakness in the NA session. Although no clear catalysts were detected behind the broad-based selling pressure witnessed on the buck, a retreat in the US T-bond yields seems to be weighing on the US Dollar Index. At the moment, the 10-year reference is down 0.5% on the day while the DXY is losing 0.25% at 91.98. 

• US: Weekly initial claims was 259,000, a decrease of 23,000 from previous week
• Philly Fed: Index for current manufacturing activity in the region increased 5 points to 23.8

Earlier in the session, upbeat macro data from the U.S. failed to provide a boost to the index, which broke above the 92 mark on the back of the FOMC's updated economic projections that showed 11 of 16 policymakers seeing a 25 basis points rate hike appropriate in December.

In the meantime, the shared currency found some demand after the data published by the European Commission revealed that the Consumer Confidence improved to -1.2 in September from -1.5 in August, supporting the pair's rise. On the other hand, the speech by the ECB President Mario Draghi failed to provide any fresh insights into the monetary policy as his comments were focused on macroprudential policies and their impacts on financial institutions.

On Friday, Markit will be releasing manufacturing and service sector PMI data for both the Eurozone and the United States. Moreover, Draghi will be delivering another speech at the ECB Youth Dialogue event in Dublin, but it would be surprising if he gave any comments that could impact the price action of the pair.

Technical outlook

On the upside, the pair faces the first technical resistance at 1.1940 (20-DMA) before 1.2000 (psychological level) and 1.2090 (Sep. 8 high). On the flip side, supports could be seen at 1.1865 (daily low), 1.1770 (Aug. 25 low) and 1.1710 (Aug. 18 low). 1.1845 (Sep. 14 low) and 1.1800 (psychological level). Despite this latest rise, the RSI indicator on the daily graph remains near the 50 mark, suggesting that the bullish momentum is not strong enough to suggest a continuation.

• EUR/USD pullback could test 1.1770 – UOB