- EUR/USD renews two-months as King dollar dominates.
- T-yields surge on stimulus hopes, strengthening US economic recovery.
- USD bulls cheer cautious market mood as focus shifts to US macro news.
Following a brief recovery stint in the overnight trades, EUR/USD has met fresh supply and breached 1.2000, refreshing two-months low this Thursday.
The main currency pair falls for the fourth straight session, thanks to the broad-based rally in the US dollar across the board. The greenback continues to benefit from the relative strengthening of the US economic recovery, with the recent macro data pointing to further upside risks.
Renewed optimism surrounding the economic recovery gaining momentum has pushed the US Treasury yields higher across the curve, also adding to the upside in the buck. Meanwhile, negative close on the Asian bourses amid China’s liquidity concerns hurt the market mood, lifting the haven demand for the dollar.
On the EUR-side of the story, markets look forward to Mario Draghi taking the helm of the Italy, Europe’s third largest economy. Eurozone’s slow coronavirus vaccine delivery could be also collaborating with the downside bias in the spot. The EUR traders have ignored the acceleration in Eurozone’s price pressures for January.
“The pair could drop below 1.20 unless the Eurozone Retail Sales data for December due at 10:00 GMT shows a significant rise in consumer spending. In that case, traders may put a bid under the single currency, helping EUR/USD avoid a move below 1.20,” FXStreet’s Analyst Omkar Godbole notes.
Also, of note remains the US weekly jobless claims and factory orders for fresh dollar trades. Meanwhile, any surprises from the Bank of England (BOE) at its policy meeting could have a cross-driven rub-off effect on the euro.
EUR/USD 15-mins chart
Technical levels to watch
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