The common currency was bearish on Tuesday just after the rally pushed the currency to the 1.1400 handle. The declines come amid any major economic news out of the Eurozone. Italy’s deficit continues to remain one of the prevailing narratives. However, the declines in the euro came due to a stronger greenback which is on track to post the second day of consecutive gains. On the economic front, Germany’s GfK consumer confidence report is due to come out later today.
Will the EURUSD Retrace Lower?
The reversal off the 1.1400 handle comes on a potential profit taking. The currency pair has extended strong declines since hitting this level. The short term support is found at 1.1339. If EURUSD fails to rebound at this support, we expect to see a sharper correction. This will pull the euro lower to the 1.1250 level. To the upside, the currency pair could remain range bound within 1.1400 and 1.1339.