EUR/USD spikes to session peak, focus remains on Yellen

The EUR/USD pair staged a goodish recovery on Friday and has now jumped to fresh session peak, reversing majority of the losses posted in the previous session.

Currently trading around 1.0540-45 band, the pair extended its recovery move from the very important 1.0500 psychological mark support amid modest greenback retracement, with the key US Dollar Index dipping below the 102.00 handle. In absence of any fresh fundamental news / development, possibilities of some shorts being stopped out on a sustained move back above previous strong support, now turned immediate resistance, near 1.0525-30 region, could be attributed to the pair's spike in the past hour or so.

Despite of today's recovery move, the pair is yet to clear an important support break, now turned strong resistance, near the 1.0550-55 region. Hence, traders would wait for a follow through strength beyond the said resistance to see if the current up-move is backed by any genuine buying, or is just a stop run, and the position themselves for additional near-term recovery. 

However, with markets already pricing-in possibilities of a Fed rate-hike action in March, even a minor up-tick in the US treasury bond yields would be enough to distort the current recovery move and turn the pair vulnerable to resume its prior depreciating move. Hence, investors' focus on Friday would remain glued to the upcoming speeches from various FOMC members, including the Fed Chair Janet Yellen, for reinforcement of March Fed rate-hike action. 

Fed-speak rises to a crescendo today – RBC CM

In the meantime, the release of US ISM non-manufacturing PMI would be looked upon to grab some short-term trading opportunities during early NA session.

Technical levels to watch

Sustained recovery move above 1.0550-55 immediate resistance is likely to get extended towards 1.0575-80 resistance before the pair aims to reclaim 1.0600 handle and head towards testing 1.0625-30 hurdle. On the flip side, weakness back below 1.0525 level might continue to find support near 1.0500 mark, which if broken decisively could accelerate the slide towards mid-1.0400s (Jan. 11 low), en-route 1.0400-1.0390 support area.