EUR/USD under pressure, drops to test critical support at 1.0760
|- US dollar extends gains on Friday as Wall Street tumbles.
- US yields are relatively steady in the recent range, near multi-year highs.
- EUR/USD heads for the lowest weekly close since March 2020.
The EUR/USD dropped further on Friday on the back of a stronger US dollar and printed a fresh four-day low at 1.0769. It remains near the lows, under pressure, and looking at the 1.0760 support area.
Dollar soars, Lagarde turns hawkish?
The US dollar printed fresh highs across the board late on Friday as US stocks added to losses. The DXY gains 0.63% and trades at 101.25, the highest since 2020. At the same time, US yields remain around the recent range, at multi-year highs. The expectations of a more aggressive tightening from the Fed continue to support the dollar, particularly after Fed Chair Jerome Powell's comments on Thursday.
European Central Bank President Christine Lagarde said on Friday that the central bank’s purchase programme could end in early Q3 and added, that interest rates could be raised in 2022. Her words sounded more hawkish compared to Thursday’s speech but did not help the euro.
Testing key zone
The slide of EUR/USD pushed it to a critical support area seen around 1.0760, slightly above the multi-year low hit on April 14. The euro needs to hold above it in order to avoid a deterioration in the already negative technical outlook.
“A slide below the 1.0760 price zone should open the door for a test of 1.0635, the low posted in March 2020. Further slides below the latter expose the 1.0520 region en route to the multi-year low posted in January 2017 at 1.0339. On the other hand, the pair needs to clear 1.0920 to have chances of further recoveries, aiming for 1.1010 first and the 1.1100 area later,” explained Valeria Bednarik, Chief Analyst at FXStreet.
Technical levels
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