EUR/USD: Upside capped at 1.0640 as USD recovers ahead of Fed

The Asian recovery seen in EUR/USD lost legs just below the key confluence zone of 5 & 50-DMA located at 1.0649, and now eases further towards 1.06 handle.

The EUR/USD pair is seen reversing gains as the USD buying picks-up pace over the last hours. Also, the Euro meets fresh sellers amid increased cautiousness as the Dutch head for casting their vote at general elections held today.

Analysts at Goldman Sachs, expect a coalition government to be formed as an outcome of today’s election. “The new coalition government is likely to be fractured and less cohesive than recent Dutch administrations,” Goldman Sachs noted.

Moreover, today’s Netherland’s elections could be an acid test for other European elections ahead, as a result of which the spot remains confined in a 50-pips narrow range above 1.06 handle.

Looking ahead, all eyes remain on the FOMC decision due later in the American afternoon. In the meantime, the US CPI and retail sales data could have some bearing on EUR/USD.

EUR/USD Technical Levels   

Valeria Bednarik, Chief Analyst at FXStreet noted, “It would take an extremely negative surprise coming from Yellen to push the pair beyond the mentioned 1.0700/20 region, with the pair then targeting 1.0760 as immediate resistance, en route to 1.0820, the 50% retracement of the mentioned monthly decline.”

“To the downside, 1.0600 is the immediate support, but it would take a break below 1.0565 to confirm a bearish extension towards the base of the range at 1.0490/520,” Valeria added.