EUR/USD pullback loses momentum

• EUR/USD corrects from 3-year highs but still headed for a monthly gain
• Focus on FOMC meeting and US nonfarm payrolls this week

EUR/USD managed to move away from daily lows, recovering a few pips over the last hours after hitting an intraday low at 1.2336 amid higher US yields that translated into a stronger greenback. However, EUR/USD recovered some ground during the American afternoon and climbed to the 1.2390 area to last trade at 1.2388, still 0.28% down on the day. 

The EUR/USD pair entered a corrective phase over the last sessions after reaching a 3-year high of 1.2537 last week as the dollar slumped in the wake of comments from US Treasury Secretary Steven Mnuchin who said a “weak dollar was good for trade”. However, despite recent correction, EUR/USD remains on track for a sharp monthly gain, the third in a row and the ninth out of the past 11 months.

Investors’ attention now turns to Fed’s policy decision on Wednesday ahead of the US nonfarm payrolls report due on Friday. 

EUR/USD technical levels

In terms of technical levels, EUR/USD supports are seen at 1.2303 (10-day SMA), 1.2290 (Jan 24 low) and 1.2222 (Jan 23 low). On the flip side, resistances line up at 1.2432 (intraday high), 1.2493 (Jan 26 high) and 1.2537 (3-year high scored Jan 25).