- US dollar erased losses against EUR, amid higher US yields and a strong US dollar.
- EUR/USD finds support above last week lows.
The EUR/USD pair dropped from 1.1240 to 1.1210 hitting a fresh daily low and closed the gap. If found support slightly above last week low and as of writing trades at 1.1220/25, around the same level it closed on Friday.
The move lower took place amid a rally of the greenback in the market following the ISM manufacturing report that came in above expectation. The index came in at 55.3 (versus 54.2) while the Price Index also surpassed expectations. “After a torrid run, the US has produced some positive news on growth with the ISM manufacturing bouncing back up from two-year lows and construction spending surging higher at the beginning of 2019″, said James Knightley, Chief International Economist at ING. According to him, a positive resolution to the ongoing trade talks, could remove a considerable amount of uncertainty and give businesses the confidence to put more money to work. They don’t see any interest rate cuts this year from the Fed.
The euro lost strength today after approaching 1.1250 and after the release of the EZ PMI and inflation. The US dollar gained momentum during the last hour across the board. It is flat versus the euro but sill lower against commodity and emerging market currencies weakened by risk appetite.
In Wall Street, equity prices are higher. The Dow Jones is up 0.98% and the Nasdaq gains 0.86%. Regarding yields, the 10-year jumped from 2.45% to 2.48%, to the highest since March 22.
Levels to watch
The EUR/USD pair is biased to the downside, but at the moment remains within two key levels: to the downside, the 1.1200 area and to the upside 1.1250. A break under 1.1200 would expose year-to-day lows at 1.1170/75 . On the flip side, on top of 1.1250 the euro will likely gain momentum for an extension to test the next resistance at 1.1270, above then comes 1.1300.
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