EUR/USD trades below 1.450 as US Dollar Index looks to post modest daily gains
|- PPI in the euro area declines more than expected in January.
- Investor Confidence continues to deteriorate.
- Broad-based USD strength further weighs on the pair.
Since failing to hold above the 1.15 mark last week, the EUR/USD pair has been having a difficult time gaining traction. After starting the week on a weak note, the pair extended its losses and touched a 5-day low of 1.1424 before rebounding modestly. As of writing, the pair was trading at 1.1425, losing 0.16% on a daily basis.
Earlier today, the data published by the Eurostat revealed that the Producer Price Index (PPI) in January declined by 0.8% on a monthly basis and dragged the annual rate down to 3% from 4% recorded in December. Additionally, Sentix Investor Confidence edged down to -3.7 to fall short of the market expectation of -0.6. "The sentix indices are performing similarly to the recent ifo index: with slightly improved expectations, the situation values continue to collapse. Things are looking a little better internationally. The overall indices may improve slightly here. But this is not enough to proclaim a turnaround," Sentix noted in its publication.
In the second half of the day, boosted by a decisive increase in the 10-year T-bond yield, the US Dollar Index pushed higher to reflect a broadly stronger greenback and forced the pair to suffer more losses. However, the lack of fundamental developments that could have supported the DXY's rally, the index went into a consolidation phase and was last seen moving sideways in the upper-half of its daily range in the 95.80-90 area.
On Tuesday, Markit is scheduled to publish its Services PMI reports for the euro area and Germany as well as the U.S. later in the day. If the PMI data from the eurozone disappoint tomorrow, we could see the shared currency come under a renewed pressure.
Technical outlook by FXStreet Chief Analyst Valeria Bednarik
The 4 hours chart shows that a horizontal 20 SMA caps the upside, while the 100 and 200 SMA converge around 1.1410. The Momentum indicator in the mentioned chart maintains a bearish slope below its 100 level, while the RSI heads nowhere around 50. The pair is neutral, with chances of a directional move either on a break above 1.1460 or below 1.1425, both levels Fibonacci retracements.
Support levels: 1.1425 1.1390 1.1350
Resistance levels: 1.1460 1.1500 1.1535
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