- DXY up 0.65%, extends gains on the best day in months.
- EUR/USD finally moves out of the 1.1360 area with a bearish breakout.
The EUR/USD pair dropped further during the American session on the back of a rally of the US Dollar across the board. As of writing trades at 1.1287, the lowest since June 21 and down 80 pips from yesterday’s close, having the worst day since March.
The key driver has been a stronger US Dollar. It benefited after the meeting between US President Trump and Chinese President Xi on Saturday. They agreed to restart trade talks and boosted risk appetite and weakened the demand from US bonds. Over the last hours, US stocks moved off daily highs, but the greenback kept rising.
The DXY is at the highest in a week, at 96.80, up 0.70%. Market participant lowered rate hike expectations from the Fed. According to the CME FedWatch Tool, futures pricing data show rising odds of a 25 basis point cut in July but diminishing odds of a 50 bp cut, compared to Friday.
More losses ahead?
The daily chart shows EUR/USD breaking a range and decisively to the downside and back below the 200 and 20-day moving averages. While the main trend could still point to the upside, technical indicators favor further losses with momentum below 100 the RSI turning south.
Around 1.1280 there is a potential support area and below the is 1.1250. On the upside, the Euro could face now resistance at 1.1300 and above 1.1340/45 could become a strong barrier again.
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