EUR/USD Forecast: Bullish Until Holds Above 1.1860 Level

On Monday, the US Dollar pared early losses to two-month lows and gained some respite on the back of stronger-than-expected new home sales data. Also, comments by the Dallas Fed President Robert Kaplan, putting December Fed rate hike move back on investors' mind, further helped ease bearish pressure around the greenback. The USD resurgence triggered a sharp retracement in the EUR/USD pair, which earlier touched a fresh multi-week high level of 1.1961.

Monday's price-action might now be seen as the first sign of a possible bullish exhaustion. However, there are more catalysts on the horizon later this week, which would help investors to determine the next leg of directional move. The key focus would be on developments surrounding the highly-anticipated US tax bill, with Republicans preparing to bring the legislation to the floor on Thursday. In the meantime, investors will confront a confirmation hearing for the Fed Chair Designate Jerome Powell, followed by the release of CB's US consumer confidence index might infuse some volatility in the FX market.

From a technical perspective, Monday's pullback hardly affected the broader bullish trend and the pair held comfortably above an important hurdle break-point, now turned support, near the 1.1860 region, now coinciding with 23.6% Fibonacci retracement level of 1.1554-1.1961 up-move. A convincing break below the mentioned support might negate any near-term bullish bias and accelerate the corrective slide towards 38.2% Fibonacci retracement level support near the 1.1800 handle.

On the upside, momentum back above the 1.1930-35 region would reinforce the near-term bullish trend and should now assist the pair to surpass the key 1.20 psychological mark and head towards testing its next major hurdle near the 1.2030-35 region.