EUR/USD: Range-trade to remain intact ahead of US tax plan

• Range trade to remain intact.
• EU economic forecasts and ECB economic bulletin closely eyed.
• US tax reforms plan – Next key risk event for USD.

The EUR/USD pair extends its 20-pips side trend into Asia, unable to find a clear direction amid a lack of fresh economic news from both continents and on increased cautiousness ahead of the US tax reforms plan due to be announced in the American morning today.

EUR/USD back near 5-DMA of 1.1607

The spot continues to find fresh bids near 1.1580 region amid subdued trading activity seen around the greenback against its major competitors, as the sentiment around the buck remains hampered by the US tax plan uncertainties. The fate of Trump’s tax overhaul plan remains undecided, given the differences between the US Senate tax cut bill and House of Representatives’ proposal.

Meanwhile, EUR/USD continues to face stiff resistances just ahead of 1.16 handle, as persisting risk-on trades, reflected by higher Asian equities and oil prices, keeps the funding currency, EUR, on the back foot.

More so, the absence of significant fundamental drivers leaves the pair wavering in a narrow range, with risks tilted to the downside on the back of divergent monetary policy outlooks between the Fed and ECB.  

Later today, the ECB economic bulletin and EU economic forecasts will be eagerly awaited for fresh impetus on the EUR ahead of the US jobless claims data and tax bill announcement.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, noted: “Technical readings in the 4 hours chart keep leading the scale towards the downside, as the price was unable to surpass a bearish 20 SMA, while indicators hover within negative territory with no certain directional strength. The range has been shrinking lately, usually a sign that a breakout will bring some directional clarity, although is hard to anticipate how long could it last.”

Anyway, the pair would need to advance beyond the 1.1700 level, or accelerate below the mentioned 4-month low, to see some follow-through afterward. Support levels: 1.1550 1.1510 1.1460. Resistance levels: 1.1630 1.1670 1.1700,” Valeria added.