- EUR/USD witnessed some heavy selling on Wednesday and dropped to fresh weekly lows.
- A sharp fall in the equity markets underpinned the safe-haven USD and exerted pressure.
- Upbeat US Durable Goods Orders did little to influence as the focus remains on the FOMC.
The EUR/USD pair maintained its offered tone through the early North American session and had a rather muted reaction to the US macro data.
The pair failed to capitalize on the previous day’s goodish intraday bounce, instead met with some fresh supply on Wednesday and might now be looking to extend the slide below the 1.2100 mark. A sharp fall in the equity markets forced investors to take refuge in the safe-haven US dollar, which, in turn, was seen as a key factor that prompted some heavy selling around the EUR/USD pair.
Investors turned cautious amid doubt about the timing and size of a new US economic stimulus package. This comes on the back of growing market worries about the potential economic fallout from the continuous surge in new coronavirus cases. Adding to this, escalating US-China tensions in the South China Sea further dented investors’ confidence and contributed to the risk-aversion mood.
The strong intraday USD positive move could also be attributed to some repositioning trade ahead of the FOMC monetary policy decision, due later during the US session. On the economic data front, the US Durable Goods Orders came in to show a modest 0.2% rise in December as against 0.9% anticipated. The disappointing print, however, was offset by an upward revision of the previous month’s reading.
Moreover, core durable goods orders (excluding transportation items) increased by 0.7% during the reported month as against 0.5% anticipated. The data did little to provide any meaningful impetus, albeit remained supportive of the strong bid tone surrounding the greenback. Meanwhile, the EUR/USD pair remained depressed near weekly lows as traders await Wednesday’s key event for a fresh impetus.
Technical levels to watch
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