EUR/USD drops to 1.1125 as USD strengthens
- US Dollar Index turns positive, weighs on EUR/USD.
- Greenback strengthens after US data, particularly the Philly Fed.
- Trump’s impeachment: Senate formal trial about to begin.
The EUR/USD pair hit earlier today at 1.1171 a one-week high before turning to the downside. The decline gained speed after it broke under 1.1140 and recently bottomed at 1.1125. As of writing, it trades at 1.1135, 20 pips below Wednesday’s close.
The decline so far found support in the lower bound of an ascendant channel seen in hourly charts. A break lower would increase the bearish pressure. However, if it the euro manages to hold above it could rebound toward the 1.1145 zone, now a resistance.
On a wider perspective, the EUR/USD holds a modestly bullish tone. According to analysts at Danske Bank, the pair will keep that bias over the next twele month. “We still look for EUR/USD to stay range-bound around 1.11 near term. On a 6-12M horizon, there is some possible but overall limited upside potential in the cross as EUR/USD remains undervalued, but for now we only expect to see a mere stabilisation. We still project the cross at 1.11 in 1M and 3M, edging to 1.13 in 6M and 1.15 in 12M.”
US dollar gains, Euro drops also versus GBP.
The move lower in EUR/USD took place amid a stronger US dollar across the board. The DXY is up for the day, above 97.30, recovering from weekly lows. US yield are up, with the 10-year at 1.81%, offering support to the greenback. The euro is also falling versus the British pound. As EUR/USD trades near daily lows, GBP/USD is hitting new fresh six-day highs.
In the US, the Senate impeachment trial is about to begin. Charges against US President Trump will be read and lawmakers will present the procedural groundwork. Regarding economic data, retail sales numbers came in slightly above expectations while the Philly Fed reading was much stronger than expected in January, favoring the decline in EUR/USD.
Technical levels