EUR/USD erases gains and drops back below 1.400 as US dollar recovers across the board

• EUR/USD fails again around 1.1400 and drops back to the 1.1370 area.  
• US dollar reverses across the board as equity prices move off highs.  

The EUR/USD pair peaked at 1.1408 after the release of the latest US economic report and then reversed sharply, falling 30 pips in an hour. It dropped to the 1.1370 area, erasing gains.  

The move to the downside took placed maid a rally of the US dollar across the board and a decline in Wall Street. The greenback is now among the top performer. The Dow Jones is still in positive territory (+0.20%) but lost more than a hundred points over the last hours.  

The greenback recovered strength despite weak US data. Numbers released today included the core PCE price index that stayed unchanged at 1.9% in December, while personal income and spending showed negative numbers. Also, the Manufacturing PM and the ISM came in below expectations.  

Higher US yields continue to support the US dollar. The 10-year is up for the third-day in-a-row and recently reached 2.75%, the highest level since January 29.  

Despite being unable to hold above 1.1400, EUR/USD heads for the second consecutive weekly gain. It is trading just below the 20-week moving average, as it continues to move sideways.  

EUR/USD weekly chart