- EUR / USD is losing ground and is trading near 1.1700.
- Rising US yields continue to support the dollar on Tuesday.
- The German flash CPI was up 0.5% month-on-month and 1.7% year-on-year.
Greater selling pressure hurts the single currency and drags the EUR/USD closer to 1.1700 following the American open on Tuesday.
EUR / USD weaker by buying USD
EUR / USD falls further and threatens to challenge key support at 1.17 amid the dollar’s relentless march north. In fact, when the US Dollar Index (DXY) is tracked, the Dollar is navigating levels last seen in early November 2020 past the 93.00 hurdle.
The pair fell further back as US yields advanced to new 2021 highs, simultaneously transforming into additional wings for the dollar rally.
In the euro data space, preliminary German inflation figures indicated that the CPI is expected to rise 0.5% month-on-month in March and 1.7% from a year earlier. The additional data saw the final indicator of Consumer Confidence in the euro zone at -10.8 for the current month.
On the other hand, US consumer confidence improved strongly in March with the Conference Board’s consumer confidence index rising to 109.7 points from 90.4 in February. This reading beat the market expectation of 96.9 points by a wide margin.
Additional details from the release have shown that the current situation index jumped to 110 from 89.6 and the consumer expectations index rose to 109.7 from 90.4. Lastly, one-year consumer inflation expectations rose to 6.7% from 6.5%.
What to look for around EUR
EUR / USD remains under heavy pressure and falls back to new lows below 1.1800. The sharp pullback in the pair came alongside the dollar’s lingering supply bias, which has been undermining the pair’s constructive outlook in recent weeks. The deterioration of morale in the euro zone, along with the poor pace of the vaccine launch in the region and the superior performance of the US economy (compared to its G10 peers) have been contributing to the renewed position offered on the single currency. However, the firm hand of the ECB (despite some verbal concerns) in combination with the expected rebound in economic activity in the region in the post-pandemic stage will likely prevent a much deeper pullback in the long-term pair.
Technical levels
At the moment, the index is losing 0.42% at 1.1715 and faces the next support at 1.1711 (2021 low on March 30) followed by 1.1574 (2008-2021 support line) and finally 1.1602 (November 4 monthly low. ). On the upside, a breakout of 1.1862 (200-day SMA) would target 1.1989 (March 11 weekly high) en route to 1.2000 (psychological level).
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