- US dollar remains under pressure against majors, extends losses.
- EUR/USD holds near the 1.1100 area, still unable to break above.
The EUR/USD pair printed a fresh weekly higher during the American session at 1.1092 but quickly pulled back under 1.1090. Near the end of the session, it continues to move sideways, holding to recent gains.
US dollar down across the board but EUR/USD fails to extend rally
The greenback dropped on Tuesday amid lower US yields. Also, BBVA analysts noted “market expectations of further rate cuts by the Federal Reserve increased.” The DXY fell for the third day in a row, extending the reversal from monthly highs toward the 97.50 area, to test mid-November lows.
The EUR/USD pair failed to benefit from the decline of the greenback. It held in the 1.1090/1.1065 range, limited by a soft euro. The common currency lost ground against its main European rivals. The EUR/CHF pair dropped to the lowest in two weeks under 1.0940 amid rising demand for safe haven.
Trade developments added concerns among investors. US President Trump said on Tuesday that a deal with China may have to wait until after the 2020 elections and threatened to impose tariffs on French goods in response to a digital tax. Stocks are falling sharply in the US, adding to Monday’s slide. The Dow Jones slides 1.25% and the S&P 500 0.92%.
Levels to watch
The momentum still favors the upside in EUR/USD, but it needs to break and consolidate above the 1.1090/1.1100 band in order to clear the way to more gains. The next target is located around 1.1125/30. On the downside, the immediate strong support is seen at 1.1060/65 (lower limit of the current range) and 1.1045.