EUR/USD eases to session lows around mid-1.16s on greenback strength

Eren Sengezer FXStreet

The EUR/USD pair, which was able to hold the 1.17 mark in the early NA session, lost its footing in the last hour and dropped to a fresh session low at 1.1650. As of writing, the pair was trading at 1.1653, losing 82 pips on the day.

The negative impact of yesterday's FOMC statement on the greenback seems to have eased on Thursday, allowing the US Dollar Index to return to pre-FOMC levels. The index, which touched a fresh 13-month low at 93 in the late Asian session, is now at 93.91, up 0.7% on the day.

Although there were no data from the U.S. today that was significant enough to change investors' mind, short coverings ahead of tomorrow's GDP numbers could be giving the USD an extra boost. The preliminary reading for the second quarter GDP growth is expected to improve to 2.6% on a quarterly basis from 1.4% in the first quarter. A better-than-expected number on Friday could help the DXY extend its gains and allow the index to finish the week higher following two straight weeks of heavy losses.

On the other hand, sentiment data from the euro area will be released on Friday and disappointing numbers could put some selling pressure on the shared currency and further weigh on the pair.

Technical outlook

With today's retreat, the RSI on the daily graph fell below the 70 handle and corrected the oversold readings. 1.1775 (daily high) could be seen as the initial hurdle for the pair ahead of 1.1870 (Jan. 11, 2015, high) and 1.1950 (Jan. 4, 2015, high). On the downside, supports are located at 1.1620 (Jul. 21 low), 1.1500 (psychological level) and 1.1395 (Jul. 12 low).

EUR/USD neutral/bearish near term – Scotiabank

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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