- US Dollar Index extends losses below the 96 mark.
- Chicago Fed’s National Activity Index improves slightly in December.
- ECB’s Draghi repeats that the balance of risk to the economic outlook moved to the downside.
The EUR/USD pair, which gained nearly 100 pips last Friday, extended its near-term rally in the NA session and rose to its highest level since January 15 at 1.1439. As of writing, the pair was trading a couple of pips below that mentioned level, adding 0.2% on a daily basis.
Although today’s data from the U.S. came in slightly better than market expectations, the US Dollar Index struggled to stage a recovery in the second half of the day and fell to its lowest level in two-weeks, suggesting that the USD weakness is driving the pair’s price action on Monday. At the moment, the DXY is losing 0.13% on the day at 95.70.
The Chicago Fed today reported that its National Activity Index improved to 0.27 in December from 0.21 in November and the Dallas Fed’s monthly publication showed that the business activity in Texas’ manufacturing sector expanded with the headline General Business Activity Index moving into the positive territory in January.
On the other hand, in his testimony before the European Parliament, Mario Draghi, President of the ECB, said that the persistence of uncertainties related to geopolitical factors and the threat of protectionism continued to weigh on the economic sentiment in the euro area and repeated that significant monetary policy stimulus was essential in order to lift the inflation toward their target. Nevertheless, the fact that Draghi had already delivered these same comments last week during the ECB presser allowed investors to ignore them.
Key technical levels
The pair could face the initial resistance at 1.1500 (psychological level/Jan. 2 high) ahead of 1.1540 (Jan. 11 high) and 1.1570 (Jan. 10 high). On the downside, supports could be seen at 1.1400 (50-DMA), 1.1350 (Jan. 18 low) and 1.1290 (Jan. 24 low).
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