- Broad-based USD strength weighs on pair on Tuesday.
- US Dollar Index advances to new weekly highs above 96.
- ECB’s Draghi says recent economic developments have been weaker than expected.
The EUR/USD pair encountered another selling wave in the NA session and broke below the 1.14 handle to touch its lowest level since January 4 at 1.1383. As of writing, the pair was down 80 pips, or 0.68%, on the day at 1.1397.
Although there were no clear catalysts that may have caused the recent fall, a broad-based USD strength seems to be the primary driver of the pair’s price action. Despite today’s disappointing macroeconomic data releases from the U.S., a sharp recovery witnessed in the T-bond yields in the last hour supported the US Dollar Index’s upsurge. Furthermore, the heavy selling pressure witnessed on the GBP ahead of the critical Brexit vote provides an additional lift to the buck. At the moment, the DXY is at its highest level in a week at 96.14, adding 0.6% on a daily basis.
On the other hand, the preliminary GDP data from Germany came in at 1.5% on a yearly basis in December to remind markets of the economic slowdown in the euro area’s biggest economy and weigh on the shared currency.
Moreover, while speaking before the European Parliament, ECB President Mario Draghi said that recent economic developments had been weaker than expected. “Uncertainties, notably related to global factors, remain prominent. So there is no room for complacency,” Draghi added.
Technical levels to consider
The initial support for the pair aligns at 1.1380 (daily low) ahead of 1.1340 (Dec. 26, 2018, low) and 1.1270 (Dec. 14, 2018, low). On the upside, resistances could be seen at 1.1430 (20-DMA), 1.1500 (psychological level) and 1.1570 (Jan. 10 high).
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