EUR/USD erases tepid recovery gains, drifts into negative territory

The EUR/USD pair failed to build on to its recovery momentum and reversed all of its daily gains, shrugging off upbeat German IFO survey. 

Currently trading around 1.0430 region, testing session lows, the pair ran through fresh offers near 1.0480 resistance area, representing 23.6% Fibonacci retracement level of 1.0839-1.0366 post-ECB slide, amid resurgent greenback buying interest, which remains underpinned by hawkish Fed forecast for 2017. 

Even today's better-than-expected German IFO business climate index failed to attract any fresh traction and the pair remained closer to nearly 14-year low touched last week. 

Later during NA session, market participants look forward to the US flash services PMI print for short-term trading opportunities. The broader trend, however, would remain dependent on the US Dollar price dynamics, which would now take fresh clues from this week's key US macro data, including the final GDP print and durable goods orders. 

Technical levels to watch

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the downward potential seems limited intraday, although there's no upward momentum around the pair according to the  4 hours chart, given that the advance is being capped by a sharply bearish 20 SMA, whilst the RSI indicator has barely corrected oversold readings before turning flat around 42. Nevertheless, an extension above the daily high can see the pair extending its advance up to the 1.0510/20 region, where selling interest will likely re-surge."

"The pair has an immediate short term support at 1.0420, which means that a downward acceleration below it will probably result in a retest of the year lows in the 1.0360 region."