EUR/USD refreshes highs near 1.2350, Draghi speech eyed

• Well bid but within range.
• Looks to take-out key resistance near 1.2355 region.
• Eyes on Draghi speech.

The EUR/USD pair appears to have caught a fresh bid-wave over the last hour, now pushing the rates closer towards the stiff resistances located near the 1.2355 region, as markets seek to take profits off the table ahead of the ECB President Draghi’s speech due today at 1400 GMT.

EUR/USD on the front foot ahead of ‘Super Political Sunday’

The spot is seen extending its upward corrective mode into a third day today, although remains in the familiar range above the 1.23 handle, as markets turn cautious and remain in a wait-and-see mode ahead of Sunday’s big political events likely to be held in Germany and Italy. Both the Italian general elections and the SPD vote on the Grand Coalition are on the same day, the outcome of which could dent the renewed upside in the Euro.

However, the main currency pair continues to find support from persistent broad-based US dollar weakness, as markets believe that the new Fed Chair Powell’s testimony on Tuesday will not offer any fresh surprises on the US interest rates outlook, and in turn, fail to lift the sentiment around the buck.  

In the day ahead, the major eagerly awaits the testimony from the ECB Chief Draghi on monetary policy and the inflation outlook before the European Parliament Economic and Monetary Affairs Committee, for fresh trading impetus ahead of the Fedspeaks and the US new home sales data.

EUR/USD levels to watch

According to Karen Jones, Analyst at Commerzbank, “EUR/USD finished the week sitting on the nearby support offered by the 1.2268/34 support lines. The rebound from here is expected to remain tepid and is expected to remain capped by 1.2345/65. Beyond this, we should see the market continue to weigh on the downside as the recent new high has been accompanied by a divergence of the daily and weekly RSI.”