- EUR / USD continues to decline after hitting highs since November.
- The dollar remains firm as it rises in Treasury yields.
- The euro is also falling against the pound, with EUR / GBP at its lowest in nearly two years.
The EUR / USD failed to sustain above 1.1300 and fell to 1.1274, where it is trading, the lowest level since last Wednesday. The pair is a few pips away from hitting a two-week low. The downward pressure remains intact, although on a larger perspective, it continues to operate sideways.
The dollar remains firm in the market supported by the rise in the yields of Treasury bonds. The DXY it is up 0.20%, and is at weekly highs above 96.40. The two-year bond yielded 0.8%, the highest in two years, increasing the spread with the German bond, which generates weakness in the EUR / USD. The advance in US rates is the key factor supporting the dollar.
Another negative factor for the euro is the EUR / GBP decline. The cross has been trading at a low since February 2020, below 0.8400.
Regarding data, a 0.6% rise in retail sales in Germany was known in November, against the expectation of a 0.3% drop. Another German report showed a drop in unemployment of 23,000, higher than the expected 15,000, with the unemployment rate at 5.2%. In Europe, the inflation data for each country are becoming known and that of the Eurozone will come out on Friday.
On the technical side, a confirmation below 1.1280 would leave the EUR / USD weak and could go to find the bottom of the range that is still in force between 1.1220 / 40 and 1.1360; which can be extended to 1.1200 / 1.1400 according to different perspectives.
In front
What happens with the bond market seems to continue to be decisive for the short term of the dollar. In this regard, the ISM manufacturing sector report and the labor advisories report will be published in the US. In addition, Minneapolis Fed Chairman Neel Kashkari will speak publicly.
The data round will continue on Wednesday with the ADP employment report and in the afternoon it will be the turn of the publication of the minutes of the last FOMC meeting.
Technical levels
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