EUR/USD drops further to 1.1430, 2-day lows

  • Spot loses further ground and tests 1.1430, fresh lows.
  • The greenback extends the bounce off lows and regains 96.00.
  • EMU’s final December manufacturing PMI came in at 51.4.

The sentiment around the European currency remains sour during the first half of the week and is now prompting EUR/USD to drop to the 1.1430/25 band, or fresh 2-day lows.

EUR/USD looks to risk trends, data

Spot is down for the second straight session at the beginning of 2019, shedding more than a cent since yesterday’s up move to highs near 1.1550.

The correction lower in the pair comes after the greenback managed to retake the critical 96.00 resistance and above, reversing the initial pessimism that dragged the US Dollar Index to new lows in the proximity of 95.80.

Other than USD-buying, the pair seems to be suffering the absence of recovery in some of the economic fundamentals in the region, particularly after December’s manufacturing PMI failed to surprise to the upside today, losing ground for the fifth consecutive month.

What to look for around EUR?

In the near term horizon, USD-dynamics should remain the main driver of the pair’s price action. Further out, the ECB’s current ‘wait-and-see’ mode is set to persist for the time being, while investors should stay vigilant on the central bank’s messages hinting at a potential hike after the summer. A threat to this view could always come from a deeper deterioration of some of the key fundamentals in the euro area, however.

EUR/USD levels to watch

At the moment, the pair is losing 0.23% at 1.1436 and a breakdown of 1.1417 (10-day SMA) would target 1.1386 (21-day SMA) en route to 1.1268 (monthly low Dec.14 2018). On the other hand, the next hurdle emerges at 1.1547 (high Jan.1) followed by 1.1623 (high Oct.16 2018) and finally 1.1655 (200-day SMA).

	EUR/USD drops further to 1.1430, 2-day lows


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