EUR/USD: Bears targeting 1.1165 ahead of ZEW?

After a brief period of overnight consolidation, the EUR/USD pair finally broke to the downside in the Asian trades, with the bulls having failed to resist above 1.12 handle once again.

EUR/USD: Focus shifts to German ZEW

The spot breached the NY low of 1.1192 and now looks to test weekly troughs of 1.1166 reached last Friday, as USD buying picks-up pace across the board, with markets preferring to hold the US currency heading into a 2-day FOMC meeting that commences today.

Markets are widely expecting the Fed to hike rates tomorrow, while signal balance sheet normalization to begin by Sept. The greenback is expected to witness an extensive rally, if the Fed offers any new surprises, suggesting a more hawkish stance.

Meanwhile, the euro remains undermined by no tapering hints offered by the ECB at its monetary policy meeting held last week, which highlights the monetary policy divergence between both continents even more.

Later today, the major will get influenced by the German WPI and ZEW Surveys, which will be reported ahead of the US PPI numbers.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet noted: “The technical picture for the pair is short term neutral-to-bearish as in the 4 hours chart, the pair was contained by selling interest around a congestion of moving averages, as the 20 and 100 SMAs converge in the 1.1220 region. In the same chart, the Momentum indicator continues heading higher, but below its 100 level, while the RSI indicator turned south, now around 42 and anticipating some additional declines ahead. Still, unless a break below 1.1080, the downward potential will remain limited. Support levels: 1.1160 1.1120 1.1080 Resistance levels: 1.1210 1.1250 1.1300.”