Shaky euro slides below 1.18

The euro has lost more ground in the Thursday session. Currently, EUR/USD is trading at 1.1773, down 0.34% on the day. On the fundamental front, Germany releases Ifo Business Climate, which is expected to rise to 93.1, up from the current 92.4.

Euro falls to lowest level since November

The euro continues to head south and has dropped 1.1% this week. If the euro closes below the 1.17 level, it will be the first time that has happened since mid-November. US Treasury yields have been on the rise, giving a boost to the US dollar against the major currencies. The eurozone continues to post strong manufacturing data, and this week’s Manufacturing PMIs showed strong growth across the bloc. The highlight was a German reading of 66.6, up from 60.4 beforehand. Business activity has also improved, showing growth for the first time in six months. Still, the strong PMIs were not enough to stem the euro’s slide this week.

The Federal Reserve has consistently told the market that it has no plans to raise rates or even taper its stimulus, arguing that the US economy is still in need of stimulus due to the severe economic downturn of Covid-19. This made a comment by Fed Chair Powell earlier in the day in an NPR interview all the more surprising. Powell said that he was generally satisfied with the Fed’s response to Covid, and that as the economy made substantial further progress, the Fed would “gradually roll back” on its asset purchases. If the Fed does have plans to taper in the near future, this could signal a rate hike is in the works, which would be bullish for the US dollar.

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EUR/USD Technical

• The euro broke below support at 1.1808 earlier in the day, and has room to continue falling into 1.16 territory. The next support level is at 1.1645.
• On the upside, 1.1856 has switched to a resistance line as EUR continues to lose ground.

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