EUR/USD extending gains, now aims to reclaim 1.1200 handle

US Dollar weakness remained a key theme in the FX market on Wednesday, with the EUR/USD pair extending its gains to currently trade around session high near 1.1175 region. 

After dipping below 200-day SMA on Tuesday, the pair recovered sharply as disappointing US labor productivity now seems have dented prospects of an eventual Fed rate-hike in 2016 and weighing heavily on the greenback. 

In absence of any important economic releases, broader sentiment surrounding the US Dollar would continue to drive the major until Friday's release of monthly retail sales data from the US. In the meantime, RBNZ monetary policy decision on Thursday might trigger some volatility in the markets and eventually provide some immediate momentum play.

From technical perspective, the pair's rebound from 200-day SMA region has lifted it beyond 1.1150 region (50-day SMA) and is also sustaining the strength at higher levels. Hence, only a turnaround in sentiment would hinder the pair's ongoing upward trajectory.

Technical levels to watch

From current levels, the momentum seems to lift the pair towards 1.1200 handle, which could further get extended towards its next major resistance at 100-day SMA near 1.1230 region. On the flip side, 50-day SMA resistance break-point near 1.1150 now become immediate support to defend, below which the pair could drop to 1.1110-1.1100 support area before heading back towards the very important 200-day SMA support near 1.1080-75 region.