EUR/USD corrects from 2-year tops, comes down below mid-1.1600s

The shared currency kept the negative tone through early NA session on Monday, with the EUR/USD pair retreating from fresh 2-year tops near 1.1685 level. 

Currently hovering around mid-1.1600s, off session lows touched during the early European session, receding US Dollar selling pressure has been one of the key factors that could have prompted some profit taking at higher level. This coupled with a slight miss from the Euro-zone PMI prints have also failed to provide any fresh bullish impetus to the major.

Meanwhile, investors seemed reluctant to initiate fresh aggressive bets ahead of this week's key event risk - FOMC monetary policy decision on Wednesday, which has eventually led to minor retracement/consolidative price-action at the start of a new trading week. 

   •  US: FOMC appears ready to start reducing the balance sheet - Nomura

Despite the pullback, investors' sentiment remains biased to the bullish side amid growing expectations of a possible ECB tapering at the September meeting. 

   •  ECB to reconsider policy at the September meeting - BBH

Moreover, growing uncertainty over the Trump administration’s pro-growth economic agenda might now restrict any swift US Dollar recovery and hence, an extension of the pair's near-term appreciating move, even beyond the 1.1700 handle, now seems a distinct possibility.

In the meantime, today's release of existing home sales data from the US, due in a short while from now would now be looked upon for some trading impetus. 

   •  US: Existing home sales likely to decline 1.1% m-o-m for June - Nomura

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "in the 4 hours chart, technical indicators have resumed their advances near overbought levels after a modest downward correction, whilst the price remains above a firmly bullish 20 SMA, this last at 1.1600."

"Beyond the mentioned high, the pair has its next intraday resistance at 1.1713, 2015 high, with a break above it exposing the 1.1740/50 price zone. A downward corrective movement could come on a downward acceleration through 1.1620, towards 1.1580, July 18th high" she added