EUR/USD extends recovery towards 1.1750 on EZ GDP, Fed minutes eyed

The EUR/USD pair is seen extending its rebound from a dip below 1.17 handle, following the release of slightly upbeat Eurozone growth figures.

EUR/USD capped below daily pivot of 1.1740

The main currency pair staged a solid comeback from a sharp dip to 1.1692 lows, helped by renewed selling seen in the US dollar across the board, as markets prefer to sell the rallies in the buck ahead of the FOMC minutes.

Markets are widely expected the Fed minutes to hint at Sept as the start time of the balance sheet normalization process, while Fed’s cautious tone on the inflation outlook could cast doubts over further Fed rate hikes this year.

Moreover, better-than expected Eurozone second quarter annualized growth figures also added extra legs to the recovery in EUR/USD. Eurozone Q2 flash GDP growth bettered expectations on yearly basis

In the last hour, the spot eroded 70-pips rapidly and breached 1.1700 support on the latest ECB headlines that cited Draghi will not deliver fresh policy message at Jackson Hole Symposium next month, squashing markets’ expectations of a hawkish twist from the central bank chief.

Lookig ahead, the US housing starts and building permits data will keep the US traders busy ahead of the much-awaited FOMC minutes release.

EUR/USD Technical Set-up  

According to Slobodon Drvenica at Windsor Brokers Ltd., “overall bullish structure keeps focus at the upside and eyes targets at 1.1910 and 1.2000 after correction, with stronger signs of bullish resumption while 1.1689 support holds. Further bullish acceleration could be expected on break above 20/10SMA pivots. Otherwise, risk of deeper correction could be expected on firm break below 1.1689 that will complete Failure Swing pattern on daily chart and expose next strong support at 1.1607 (Fibo 38.2% of 1.1188/1.1910).”