EUR/USD weakens farther below 1.23 handle, drops to near 2-week lows
| • Reviving USD demand prompts some aggressive selling at higher levels.
• Technical selling adds to the pressure and collaborates to the downfall.
• This week’s important macro releases should determine the near-term trajectory.
After an initial uptick to 1.2335 area, the EUR/USD pair met with some fresh supply and dropped to near two-week lows during the early NA session.
The pair finally broke down from its 3-day old trading range and retreated farther below the 1.2300 handle. Resurgent US Dollar demand, supported by a goodish pickup in the US Treasury bond yields was seen as one of the key factors behind the pair's break-down on Tuesday.
This coupled with possibilities of some short-term trading stops being triggered, on a sustained break below the 1.2280 support area, further aggravated the selling pressure and collaborated to the offered tone surrounding the major.
Meanwhile, today's mixed EZ PMI prints for March did little to lend any support to the shared currency, with the USD price dynamics and technical factors acting as key determinants of the pair's downfall to 1.2265-60 area, its lowest level since March 21.
Later during the NY trading session, the Fed Governor Lael Brainard's scheduled speech is unlikely to provide any meaningful impetus as traders now start repositioning for this week's important macro releases - including the EZ inflation figures and the keenly watched NFP - for fresh directional impetus.
Technical outlook
Valeria Bednarik, FXStreet's own Chief Analyst writes: “The short-term picture is neutral-to-bearish as the pair remains below its moving averages, having met selling interest on an advance to the 1.2340 region, where in the 4 hours chart, the 100 and the 200 SMAs converge directionless. In the same chart, the price is back below a bearish 20 SMA, while technical indicators lack directional strength, the Momentum around its 100 level and the RSI around 41.”
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