USD bulls are cautious ahead of the key events of the day
The euro failed to overcome the 1.1800 resistance during the rally witnessed on Friday and has been under some selling pressure since then. This immediate barrier is strengthened by the 20-DMA at this stage, suggesting the common currency could need an extra catalyst to make a decisive breakout in the near term.
The USD index has settled at two-day highs around 92.80 on Tuesday, extending further the bounce of recent lows in the 92.50 area. The safe-haven dollar derives support from the persistent risk aversion amid tightening regulation in China, tensions in the Middle East, and concerns over the pandemic which is clouding the economic outlook in Asia and elsewhere.
At the same time, USD bulls are cautious ahead of the key events of the day – a speech by U.S. Federal Reserve chairman Jerome Powell and US retail sales data. Should the retail sales report disappoint later today, the greenback could erase this week’s gains to get back to the mentioned lows. Also, Powell could express a more dovish tone in his speech, citing the worsening economic picture in the country.
Earlier in the day, EURUSD dipped to the 1.1760 area before bouncing marginally. If this support withstands the pressure, the pair would regain the 1.1780 region, followed by the mentioned moving average that arrives at 1.1800. On the downside, should the upcoming US economic data come in better-than-expected, the common currency may get back under the 1.1750 region, with the initial target arriving at 1.1730, followed by the 1.1700 key support.
In a wider picture, the upside potential surrounding the euro would stay limited as long as the advance of the delta variant of the coronavirus keeps undermining the sentiment among investors and thus props up further risk aversion, supporting the greenback.