The EUR / USD dropped to 1.0561, the lowest level since January 11 after hawkish comments from Yellen pushed up the treasury yields.
The pair continues to trade just above the one month low, with investors eyeing US CPI and retail sales release, due later today.
Eurozone trade balance is non-event
The Eurozone trade data is likely to show a seasonally adjusted surplus of EUR 2.5 billion in December. However, the data could receive little attention from the markets in the wake of Yellen’s hawkish testimony and ahead of the US data release.
The CPI is seen rising 2.4% y/y in January. The Fed may look through transitory factory, hence markets would be more interested to see if the core inflation is catching up with the headline figure. The strong CPI reading could boost the treasury yields and the US dollar. Meanwhile, the US retail sales growth is slowing to just 0.1%.
In Europe, periphery-German yield spread could play a major role in determining the exchange rate.
EUR/USD Technical Levels
The spot was last seen trading around 1.0575. A breakdown of support at 1.0567 (23.6% of trump drop) could yield a drop to 1.0511 (Jan 9 low) and then to 1.0499 (Dec 22 high). On the other hand, a break above 1.0605 (5-DMA) would expose 1.0670 (10-DMA), above which the resistance at 1.07 could be put to test.
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