EUR/USD: a bullish bias persists on dips on 1.18 handle

Currently, EUR/USD is trading at 1.1833, up 0.39% on the day, having posted a daily high at 1.1860 and low at 1.1768.

EUR/USD has been well supported despite interest rate moves & political uncertainty, holding off the supply in the higher part of the 1.18 handle while yield spreads have been favouring USD. Meanwhile, Catalan has been elusive about independence and now Spain is on to suspend autonomy Saturday.  

"Catalonia and significantly adverse (record, in effect), negative short-term rate spreads versus the USD, the EUR’s relatively firm performance suggests an underlying resilience which we think enhances its attractiveness. We retain a constructive view of the EUR outlook in the near and medium term and prefer to look for opportunities to buy EUR dips," argued analysts at Scotiabank.

However, expectations of the ECB tapering appear to be the main factor supporting the euro.

EUR/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that the overall stance is short-term bullish, as the price recovered above is 20 and 100 SMAs, whilst technical indicators gained upward momentum above their mid-lines. "Should the rally extend beyond the current region, it has scope to extend its gains up to 1.1879 the daily high posted at the end of last week."

Analysts at Scotiabank argued that  We think gains through the low 1.18s will avert immediate risks of additional EUR weakness (towards the upper 1.16s and below) and put the EUR on track for a retest of the 1.120 area.