EUR/USD continues to edge lower below 1.18, turns negative on the week

Tax reform hopes push DXY higher on Friday.
EUR/USD fails to stay above the 1.18 mark.
10-year T-bond yield is up 1%.

Eren Sengezer FXStreet

The EUR/USD pair came under pressure in the early NA session on Friday and continued to erase Wednesday's FOMC-inspired gains. After breaking below the 1.18 mark, the pair refreshed its daily low at 1.1750 and was last seen trading at 1.1756, losing 0.2% on the day.

Earlier in the session, Representative Kevin Brady, chairman of the tax-writing House Ways and Means Committee, told reporters that they were working on some final adjustments of the bill and would announce it later today. Brady further added that they were going to expand the child tax credit in order to get the support of two Republicans Senators who yesterday said would vote 'no' on the bill. The US Dollar Index, which stayed in a tight range near mid-93 for the majority of the day, gained traction and touched the 94 mark. As of writing, the index was at 93.94, up 0.32% on the day.

The improved market sentiment pushed the 10-year T-bond yield higher on Friday as well, providing an additional boost to the greenback. With central banks' meetings out of the way, investors are likely to remain focused on the developments surrounding the tax bill.

On Monday, the only noteworthy data will be the CPI from eurozone, which is expected stay unchanged at 0.1% and 1.5% on a monthly and yearly basis respectively. Despite Wednesday's sharp surge, the pair is looking to end the week in the red following yesterday's and today's fall.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet, writes, "the pair is currently trading mid-way between its weekly range, also around the 23.6% retracement of its latest daily decline, which adds to the bearish case for the upcoming days. The immediate support is the mentioned 1.1710 region, followed by 1.1660. A break below this last could lead to a test of November low at 1.1550. An immediate resistance is the 1.1800/30 price zone, followed by the stronger 1.1870 area. Beyond it the pair could turn bullish, moreover it somehow it settles above 1.1930."

EUR/USD: Stand off? - Rabobank

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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