MUFG Research flags a scope for a correction lower in EUR/USD in the near-term.
"Tentative signs are now emerging that US economy is regaining upward momentum again although it is still early days. The sharp drop in weekly initial claims to below 1.0 million provided an encouraging signal that the US labour continues to heal.
The improving trends could already be helping to lift US yields from lows at the start of this month, and ease bearish sentiment towards sentiment towards the USD. The main risk to the recent improvement in US cyclical momentum is the failure to agree on a more comprehensive fiscal stimulus package," MUFG notes.
"The developments are increasing the risk of a correction lower for EUR/USD in the near-term...A break below support at 1.1700 will be required to trigger a deeper correction," MUFG adds.