EUR/USD plummets to lows, around mid-1.1800s
| • USD continues to gain positive traction on surging US bond yields.
• Technical selling below 1.19 handle aggravates the downfall.
• US retail sales match expectations; March figures revised higher.
The EUR/USD pair finally broke down of its European session consolidation phase and tumbled below the 1.1900 handle in the last hour.
The pair extended overnight rejection slide from the vicinity of the key 1.2000 psychological mark and traded with a bearish bias for the second consecutive session on Tuesday. The US Dollar continued gaining positive traction, further supported by resurgent US Treasury bond yields, and kept exerting downward pressure on the major.
The selling pressure remained unabated following the release of US monthly retail sales data, coming in to show a m-o-m growth of 0.3% for April. The positive in-line figure were further complemented by an upward revision of previous month's sales, now showing a growth of 0.8% m-o-m as against 0.6% reported earlier, and stronger than expected Empire State manufacturing index, which rose to 20.1 for May from 15.8 in April.
Meanwhile, possibilities of some short-term trading stops being triggered on a weakness back below the 1.1900 handle could also be one of the factors behind the pair's sharp drop of around 80-pips over the past couple of hours. Currently trading around mid-1.1800s, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility.
Technical levels to watch
A follow-through weakness would indicate resumption of the pair's prior depreciating slide and accelerate the downfall towards testing the 1.1800 handle. On the flip side, any recovery attempts now seems to confront immediate resistance near the 1.1900 handle and is closely followed by resistance near the 1.1915-20 region.
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