EUR/USD extends recovery from 1.0965 important support

The EUR/USD pair staged a minor recovery from 1.0965-70 important horizontal support and is gradually heading back towards 1.1000 psychological mark.

Currently trading around 1.0985 level, the pair initially dropped to the lowest level since July 27 amid increasing odds of an eventual Fed rate-hike action by the end of this year. 

The major, however, witnessed a short-covering bounce as market participants remain divided over ECB's QE program, with some market participants expecting the central to extend the program beyond March 2017 while some expect ECB to taper its bond purchases, which forced traders to take some profits off the table from an important horizontal support following last week's sharp slide of over 230-pips. 

Going forward, the final print of Euro-zone CPI will be in spotlight during European session, while Empire State Manufacturing Index, Capacity Utilization Rate and Industrial Production data from the US would provide impetus during NA trading session.

Technical levels to watch

From current levels, the  ongoing recovery is likely to confront strong hurdle near 1.1000 handle, which if conquered is likely to boost the pair immediately towards 1.1050 horizontal resistance. A follow through buying interest could further lift the pair towards an important support break-point, now turned strong resistance near 1.1125-20 area.

On the flip side, 1.0970-65 horizontal zone remains immediate support to defend below which the pair seems vulnerable to aim back towards Brexit swing lows support near 1.0910 region.