EUR/USD on the way to breach the 1.20 handle as Fed less convincing

Currently, EUR/USD is trading at 1.1974, up 0.43% on the day, having posted a daily high at 1.1985 and low at 1.1917.

EUR/USD has been capped and has moved into a phase of consolidation around the 1.1980/90 resistance window. The US dollar is pressured from the lack of guidance of Yellen's speech at the end of the week last week and indeed markets only price in less than a 40% chance of a Fed hike as soon as December. There are also doubts over any policy changes as soon as next month. The euro has been able to benefit from Draghi's lack of concern over the strength o of EUR/USD and this has been seen as an endorsement for the bulls targeting the 1.20 handle.  

US Dollar Index extends slide, hits fresh 1-year lows near 92.00

EUR/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that technical indicators in the 4 hours chart maintaining their bullish slopes, despite being in overbought territory. "In the same chart, the 20 SMA keeps heading north well above the larger ones, but below the current level, favoring an extension up to the 1.2000 region and beyond for this Tuesday," Valeria noted.

With the euro in the rise, a break of the psychological level opens the 1.2042 2012 low. "Minor support below the early August high at 1.1910 comes in at the 1.1848 August 11 high. While the next lower August 25 low holds, upside pressure, should be maintained. Only if an unexpected drop below the 1.1662 mid-August low were to be seen would the 1.1654/13 area be targeted. It is where the late July low meets the five-month support line, " explained analysts at Commerzbank.