EUR/USD looks to close 2018 around mid-1.14s

• US Dollar Index stays in lower-half of the daily range.
• US 10-year T-bond yield drops below 2.7% for the first time in 10 months.
• EUR/USD loses more than 500 pips in 2018.

Amid a lack of significant fundamental drivers and the thin holiday markets, the EUR/USD pair fluctuates in a tight 40-pip range on Monday and clings to small daily gain above the 1.14 mark. As of writing, the pair was up 10 pips on the day at 1.1450.

The only driver of the pair’s price action seems to be the greenback’s market valuation today. After failing to hold above the 97 mark last week, the US Dollar Index extended its slide on Monday and touched its lowest level since late November at 96.12. With the 10-year US T-bond losing more than 1.7% and slumping to its lowest level since February below 2.7%, the greenback struggled to stage a recovery and was last seen down 0.23% on the day at 96.17.

When investors return to action on Wednesday, they will be paying close attention to the IHS Markit’s Manufacturing PMI reports for Germany, the euro area, and the United States. Later in the week, the eurozone inflation report and the NFP figures from the U.S. will highlight the economic calendar.

For the year, the pair is down more than 500 pips after starting 2018 a little above the 1.20 handle. The Fed’s tightening policy and political concerns in the euro area alongside with an economic slowdown seem to be the main theme of the year.

Technical levels to consider