EUR/USD longs are fighting fiercely as the pair still appears to be forming a base ahead of ECB event risk.
The slide after Friday's U.S. jobs data extended below the 21-DMA earlier but the losses were short lived.
The rally in Italian government bonds helped EUR/USD reverse earlier losses today.
Italian Economy Minister Tria predicted lower yields when the country's budget is presented.
The persistent reassurances from Italy's government regarding the budget has alleviated some market concerns.
DE-IT and DE-U.S. yield spreads are tightening further, helping EUR/USD pierce the 55-DMA.
ECB risks will likely be limited since it has telegraphed its intentions regarding QE-taper and potential rate hikes.
Positioning could indicate bulls are gaining some control as well.
CFTC stats show institutional investors building net-long EUR positions while typically contrarian retail accounts are building net-short EUR/USD positions.
EUR/USD bulls are leaning on structural support in the 1.1510/30 region.
This zone seems formidable and has halted recent pullbacks.
If that support fails to break soon bears are likely to throw in the towel.
A test and possible rally above 1.1750/1.1800 is then likely.
chart: Click here