EUR/USD Violates Double Bottom Support – A Quick Daily Outlook!

The EUR/USD pair closed at 1.20417, after placing a high of 1.21089, and a low of 1.20230. The EUR/USD pair extended its losses, dropping for the second consecutive session on Wednesday, to its lowest level since February 8, on the back of the increased value of the US dollar and rising US Treasury yields. The main driver for the EUR/USD pair on Wednesday remained the rising US Treasury yields on the 10-year note, which rose by 1.33%, to its highest level in a year, providing support for the US dollar. The greenback was already strong across the board, due to better-than-expected US macroeconomic figures on the day.

On the data front, at 18:30 GMT, the Core Retail Sales for January came in, showing a surge to 5.9%, against the projected 1.1%, supporting the US dollar and adding to the losses in the EUR/USD pair. In January, Retail Sales also surged, coming in at 5.3%, against the projected 1.1%, which boosted the US dollar. For January, the Core PPI also rose sharply, coming in at 1.2%, against the projected 0.2%, which gave the greenback a lift and dragged the EUR/USD pair further down. For January, the PPI also surged, coming in at 1.3%, compared to the projected 0.4%, which also helped the US dollar, and dragged the EUR/USD pair downward

At 19:15 GMT, the Capacity Utilization Rate for January was released, also showing a surge to 75.6%, against the projected 74.9%, which boosted the US dollar. In January, Industrial Production surged to 0.9%, against the projected 0.4%, supporting the US dollar and extending the losses in the EUR/USD pair. At 20:00 GMT, the Business Inventories in December came in, showing a surge to 0.6%, against the projected 0.5%, which weighed on the greenback and capped any further downside momentum in the EUR/USD pair. The NAHB Housing Market Index surged to 84, against the projected 83, supporting the US dollar and adding further losses for the EUR/USD pair.

The surprisingly strong macroeconomic figures from the US lifted the demand for safe-haven US dollars and put an additional burden on the EUR/USD pair’s prices, which were already declining. Furthermore, the FOMC published the minutes of their latest meeting, which suggested that policymakers were not in favor of easing QE measures too soon, as it would be premature, and that they were expecting the purchasing of assets to remain at current levels until Q1 of 2022. The minutes also suggested that the pace of the economic recovery had moderated in recent months.

In the absence of any fundamentals from the European side, the sharp shift in the US dollar remained the sole driver of the EUR/USD pair on Wednesday. The PMI projections from both sides on Friday, and the US housing data on Thursday, will influence the prices of the EUR/USD pair this week, and investors will keep an eye on them for further clues about the movement of the pair in terms of prices.