- Mixed data from the U.S. weighs on the greenback.
- Trade surplus narrows in the euro area.
- EUR/USD looks to finish the second straight week in the red.
The EUR/USD pair slumped to its lowest level since mid-November at 1.1235 earlier in the day as the rising US T-bond yields boosted the demand for the greenback and weighed on the pair. After finding support near that mentioned level, the pair staged a modest recovery in the NA session and erased a large part of its daily losses. As of writing, the pair was trading at 1.1303,adding only 0.04% on a daily basis. If the pair fails to hold above 1.13 at the end of the session, it will close the week below that level for the first time since June.
The data published by the Eurostat today showed that the trade surplus in the euro area narrowed to €17 billion in December from €19 billion in November. Later in the day, while speaking at an event, European Central Bank board member Benoit Coeure said that the slowdown in the eurozone was clearly stronger and broader than expected. Coeure further added that the ECB has recently discussed the possibility of a new TLTRO to further weigh on the shared currency.
In the second half of the day, the greenback gained traction after the 10-year US Treasury bond yield rose sharply on the back of renewed U.S. – China trade optimism. Moreover, the New York Fed’s Empire State Manufacturing Index improved to 8.8 in February to surpass the market expectation of 7. However, other data from the U.S. showed that the industrial production in January declined by 0.6% and the capacity utilization fell to 78.2% from 78.8% to force the greenback to lose its bullish momentum. The US Dollar Index, which advanced to a fresh 2019 high of 97.37, was last seen down 0.1% on the day at 96.90. Investors may also be looking to book their profits ahead of the weekend and bring in some extra selling pressure on the buck.
Technical outlook by FXStreet Chief Analyst Valeria Bednarik
The bearish case is stronger in the daily chart, as the price is below all of its moving averages which maintain strong downward slopes. The closest is the 20 DMA at 1.1365. The Momentum indicator heads lower in negative levels and at its lowest for this year, while the RSI lacks directional strength, consolidating around 40.
Supports from the current level came at 1.1250 and 1.1215, the low set in November 2018, with a break below this last anticipating a steeper decline first toward 1.1160 and later toward the 1.1100 figure. The 1.1300 figure is offering an immediate resistance ahead of this week high of 1.1341. Beyond it, the recovery could extend up to 1.1400, where selling interest is expected to return.
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