EUR/USD clings to modest recovery gains but lacks follow-through
• Retracing USD/US bond yields remain supportive of the modest rebound.
• Dovish ECB minutes/Italian political jitters capped any meaning up-move.
The EUR/USD pair held on to its modest recovery gains above the 1.1700 handle, albeit now seemed struggling to gain any follow-through traction.
The ongoing US Dollar profit-taking slide, triggered by a dovish assessment of Wednesday's FOMC meeting minutes, showed little signs of easing amid a sharp retracement in the US Treasury bond yields and following an unexpected rise in the US initial weekly jobless claims.
Bulls, however, lacked any strong conviction and held back from placing any aggressive bullish bets after the ECB minutes from the April meeting confirmed that the central bank is in no hurry to change its current monetary stance.
This against the backdrop of recent political turmoil in Italy, which had been one of the key factors denting sentiment surrounding the shared currency, further collaborated towards keeping a lid on any meaningful recovery for the major.
Hence, it would prudent to wait for a strong follow-through buying interest before confirming that the pair might have bottomed out in the near-term and is poised to recover further in the near-term.
Next on tap would be the release of existing home sales data from the US, which along with a scheduled speech by Atlanta Fed President Raphael Bostic would now be looked upon to grab some short-term trading opportunities.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst writes: The short-term technical picture maintains the risk leaned to the downside despite the absence of downward strength, as in the 4 hours chart, the pair is still trading below its moving averages, with the shorter one capping the upside around the mentioned daily high, and as technical indicators aim higher, but within negative levels. The pair would need to advance beyond 1.1790 to gain some further upward traction and retest the weekly high at 1.1829.