EUR/USD spikes to 1.1833 and retreats to 1.1800

• US dollar extends losses versus yen and European currencies. 
• EUR/USD pulls back from fresh high, still up more than 50 pips. 

The EUR/USD pair spike to the 1.1830 area boosted by a slide of the US dollar across the board but it failed to hold and pulled back. The euro peaked at 1.1833, the highest level since last Thursday before retreating to 1.1797. 

As of writing, it trades at 1.1805, up 55 pips from Friday’s close. The move to the upside was driven by a weak US dollar. Despite EUR/USD rally the EUR/GBP pair is falling modestly on Monday. 

In the US, investors are looking for the passage of the tax reform bill that could be the main driver over the next days. In the Eurozone politics could also play a relevant role. In Germany, Chancellor Merkel will try to put a new government while in Spain, elections in Catalonia will take place on Thursday. With data in the US and the EZ showing a healthy economy and no surprises, politics is likely to be a key player during the last weeks of 2017. 

Technical outlook 

“The 4 hours chart for the pair shows that the price is right below the 38.2% retracement of its December decline, still stuck within directionless moving averages, and with technical indicators losing upward strength within bearish territory, all of which anticipates some further range trading ahead” said Valeria Bednarik, Chief Analysts at FXStreet. 

According to her the key level to the upside is the 1.1870 price zone, “as only above it the pair could turn bullish mid-term.” 

In the short-term, a break below 1.1770/80, the 20 SMA in four hours chart, could expose daily lows at 1.1730/35.