- EUR / USD witnessed strong selling on Wednesday and fell to fresh weekly lows.
- A sharp drop in equity markets supported the dollar as a safe haven and put pressure.
- Upbeat US durable goods orders made little difference, as the focus remains on the FOMC.
The pair EUR/USD He maintained his offered tone during the early North American session and had a rather subdued reaction to US macroeconomic data.
The pair was unable to capitalize on the good intraday bounce of the previous day, instead it was met with new offers on Wednesday and may now be looking to extend the slide below 1.2100. A sharp drop in equity markets forced investors to take refuge in the safe-haven US dollar, which, in turn, was seen as a key driver for strong selling around the EUR / USD pair.
Investors became wary amid doubts about the timing and size of a new US economic stimulus package This stems from growing market concerns about the potential economic consequences of the continued rise in new coronavirus cases. In addition to this, escalating tensions between the United States and China in the South China Sea further eroded investor confidence and contributed to the climate of risk aversion.
The strong positive intraday movement of the USD could also be attributed to some trade repositioning ahead of the FOMC’s monetary policy decision, which will come later during the US session. On the economic data front, orders for Durable goods in the US posted a modest 0.2% increase in December from the 0.9% forecast. The disappointing figure, however, was offset by an upward revision from the previous month’s reading.
Additionally, core durable goods orders (excluding transportation items) increased 0.7% during the reported month versus 0.5% forecast. The data did little to provide any significant boost, although it continued to support the strong offered tone surrounding the dollar. Meanwhile, the EUR / USD pair remained depressed near weekly lows as traders await Wednesday’s key event for further momentum.
Technical levels
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