EUR/USD: Weakest daily close since June 2017, focus on US durable goods
- EUR/USD looks south toward 1.10, having bolstered the already bearish technical setup with a close below 1.1176 yesterday.
- The dollar will likely remain bid on growing US-Eurozone economic divergence.
- An above-forecast US durable goods data may hasten the drop to 1.10.
The EUR/USD pair took a beating yesterday, courtesy of the broad-based US dollar demand.
The pair closed fell 0.66 percent – the biggest single-day drop since March 22. Further, the spot closed at 1.1153 – the weakest daily close since June 2017. More importantly, with a convincing close below 1.1176 (March 7 low), the shared currency has established a new lower low, validating the bearish lower high created at 1.1324 earlier this month.
As a result, a deeper drop toward 1.10 could be seen – more so, as the German 10-year bond yield has again dropped below zero.
Indeed, the 10-year treasury yield has also dropped nearly 10 basis points in the last ten days and may continue to lose ground as most major central banks have recently adopted dovish stance.
Even so, the dollar will likely remain bid as the persistent rise in stock markets coupled with the upbeat macro data releases makes the Fed more and not less likely to tighten, as stated by BK Asset Management’s Kathy Lien.
Note that the upbeat March US retail sales figures released last week convinced many that the economy did well in the first quarter than previously thought.
That belief would strengthen further, leading to a further drop in EUR/USD toward 1.10, as suggested by charts, if the US data, due today at 12:30, shows the spending on durable goods rebounded sharply in March, having dropped 1.6 percent in February.
Pivot points
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
