After initially clinging to the 1.20 level, EUR/USD lost that line. And after not going anywhere at first, the pair is now accelerating its falls. On its way down, euro/dollar slipped below 1.1960. That was the high point in late November, that turned into a line of support.
After losing yet another line of support, can the pair continue lower? The next level of support is 1.1910, another line that held the pair back before it headed higher. Further support is at 1.1860, followed by 1.1810. The low so far today is 1.1932.
What will it take to see another fall?
The big driver of the pair is not the euro, but the dollar. The greenback had a poor end to 2017 and this continued into 2018. Yet the tables have turned in favor of the buck after a few days. Why? Data is mixed and politics remains messy, but US bond yields are rising and this attracts flows into the US. In addition, we are seeing a much-needed correction after the big fall.
The calendar is relatively light today: the US JOLTs jobs report is the main event. The really big event comes only on Friday: the US inflation report. If we see core inflation only at 1.7% y/y once again, the current flow into the dollar could reach a halt.
And what about the euro? We have the meeting minutes on Thursday, but this may not necessarily rock the boat.Get the 5 most predictable currency pairs