EUR/USD slips to session lows on USD strength

Eren Sengezer FXStreet

Following a drop below the 1.09 handle, the EUR/USD pair struggled to rise above that level during in the second half of the trading day as the US Dollar Index continues to show resilience against its competitors. As of writing, the pair was trading at session lows around 1.0870, losing 0.6% on the day.

The pair's price action has been dominated by the greenback on Wednesday. After recording a 70-pip gain in the previous day, the pair changed direction and started to fall as the US Dollar Index recovered above 99 handle, which has formed a tough resistance on Monday and Tuesday. At the moment, the index is at 99.20, gaining nearly 0.5%.

The recent upsurge witnessed in the US Dollar Index seems to have been triggered by the latest developments surrounding Trump's tax reform. Earlier in the session, U.S. Treasury Secretary Steven Mnuchin stated that the tax plan would have a cut to businesses to 15%. Steven Mnuchin and National Economic Director Gary Cohn will appear before the press at a joint press conference in the White House at 17:30 GMT and they are expected to share the details of the proposed tax reform.

US Treasury's Mnuchin confirms that business tax will be 15% in Trump tax reform plan - Reuters

Technical outlook

Yesterday's low at 1.0850 could be seen as the first technical support for the pair ahead of 1.0785 (200-DMA) and 1.0740 (Mar. 29 low). On the flip side, with a break above 1.0950 (Apr. 25 high), the pair could aim for 1.10 (psychological level) and 1.1065 (Nov. 8 high).

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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