EUR/USD on a steady recovery path towards 1.2350, German CPI eyed

• Month/ quarter-end flows continue to drive the EUR markets.  
• German CPI, US core PCE to hold the key for fresh direction.

Having found strong bids once again just ahead of the 1.23 handle in Asia, the EUR/USD pair attempted a steady recovery from four-day troughs, with the bulls now looking to extend the bounce heading into the early European trading.

The selling interest around the US dollar gathered pace over the last hours, prompting a fresh bounce in the spot. The greenback paused its recent rebound and fell back into the red zone amid a bout of profit-taking, as markets seek to lock-in gains ahead of the US data dump due later on Thursday.

Also, the renewed uptick in the major can be due to a readjustment of the positions, as markets head into the Easter holiday-break, with thin trades to drive the sentiment in the upcoming sessions.

In the meantime, the EUR traders await the German CPI release, with softer figures likely to halt the relief rally in the pair. Also, in focus remains the US core PCE price index and consumer sentiment data, which may offer some near-term trading opportunities.

EUR/USD levels to watch

Commerzbank’s Analyst Karen Jones notes, “EUR/USD has not maintained the break above the early March high at 1.2447 and there has been some slippage. The market has eroded the 55-day ma and in doing so neutralized our outlook. We remain unable to rule out a retest of the January and February highs at 1.2538/56 and the long-term downtrend at 1.2651, but this is looking less likely. We would allow for a slide to the 1.2240 20th March low.”

“Key support remains the 1.2192/55 area. This is made up of the mid-January and current March lows and the 2017-2018 uptrend. A weekly close below here would add weight to the idea that the market recently topped at 1.2556,” Karen adds.