- The EUR/USD is trading at the lowest levels since March 1st after falling for four consecutive days.
- Higher US bond yields are the primary driver, but euro-zone figures are not helpful.
- The technical picture is decidedly bearish with negative momentum.
The EUR/USD is trading around $1.2190, the lowest level since it hit a low of $1.2155 on March 1st. The main theme in financial markets is the rise of US yields. 10-Year Treasuries, the global benchmark, are near 3%. Yields reached 2.9957% on Monday, just shy of the closely watched figure. Despite a small retreat from the highs, the US Dollar continues rising.
Higher bond yields are a result of confidence and optimism by the Federal Reserve regarding the US economy and reaching the inflation target. The US also enjoyed better-than-expected economic figures: Existing Home Sales and Markit's Flash PMI data all came out ahead of early predictions.
The pair is also pressured by the euro side. The latest blow to the common currency came from the disappointing German IFO Business Climate. The No. 1 Think-Tank in the No. 1 economy in the old continent reported a score of 102.1 points, below 102.7 expected for April. The score for March was 103.3. Note that IFO changed its formula and revised all the previous data. The new methodology now includes the services sector.
The downtrend in the IFO survey contrasts the Flash PMI data released earlier this week, showing some stabilization. And, in the grander scheme of things, the euro-zone is still growing. Nevertheless, any sign of a slowdown weighs on the euro.
Later today, the US publishes New Home Sales, which are projected to pick up from 618,000 to 625,000 annualized. The Conference Board's Consumer Confidence measure carries expectations for a slight slip to 126 in April from 127.7 in March.
EUR/USD Technical Analysis
-636601549400730431.png)
The EUR/USD fell below uptrend support that accompanied it since March 1st. It is trading well below the 50-day Moving Average, and most importantly, the RSI is now leaning heavily to the downside, but still not in oversold territory. All these indicators imply further falls.
The $1.2155 is a critical level of support. Below this line, the pair falls back to levels seen only in the wake of the year. Below, $1.2090 was the peak in 2017 and works as support before the all-important $1.2000 level.
Looking up, the April low of $1.2210 is the immediate level of resistance. It is followed by the round number of $1.2300 that supported it in mid-April, followed by the 50-day MA at $1.2330.
More: EUR/USD path of least resistance remains to the downside — Confluence Detector
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays near 1.0750 following Monday's indecisive action
EUR/USD continues to fluctuate in a tight channel at around 1.0750 after posting small gains on Monday. Disappointing Factory Orders data from Germany limits the Euro's gains as investors keep a close eye on comments from central bankers.
AUD/USD drops below 0.6600 after RBA policy announcements
AUD/USD stays under bearish pressure and trades deep in negative territory slightly below 0.6600. The RBA left the policy settings unchanged as expected but Governor Bullock said that there was no necessity to further tighten the policy.
Gold price turns red amid the renewed US dollar demand
Gold price trades in negative territory on Tuesday amid the renewed USD demand. A downbeat US jobs data for April prompted speculation of potential rate cuts by the Fed in the coming months.
Bitcoin miner Marathon Digital stock gains ground after listing by S&P Global
Following Bitcoin miner Marathon Digital's inclusion as an upcoming member of the S&P SmallCap 600, the company's stock received an 18% boost, accompanied by an $800 million rise in market cap.
The impact of economic indicators and global dynamics on the US Dollar
Recent labor market data suggest a cooling economy. The disappointing job creation and rising unemployment hint at a slackening demand for labor, which, coupled with subdued wage growth, could signal a slower economic trajectory.