Solid US data and hawkish FED commentary led EURUSD lower

EURUSD recorded a another year low today at 1.1265, before bouncing back at 1.1315 area.

The Dollar strength is backed by solid US data and some hawkish FED commentary. In particular, US retail sales advanced 1.7% for the month of October, beating forecasts, while US industrial production alsosurprised to the upside, coming in at 1.6% for October instead of 0.9% expected.

What’s more, the

president of the Federal Reserve Bank of St. Louis, James Bullard led US yields higher with some hawkish commentary. He acknowledged that inflation is running high and well above the target. He supported that the FED should speed up the reduction in asset purchases and possibly

cease the asset purchase program by the end of Q1 2022. Bullard, also said we could see US interest rates rising before the end of the asset purchase program, and he is also expecting at least two rate hikes before the end of 2022. Consequently, US 10-yearTreasury yields nudged at 1.65%, and 30-years hit a high of 2.05%. This pushed the Dollar up across the board, but in particular it led to fresh year lows of EURUSD at 1.1265.

On the technical side of things now, EURUSD recorded losses the last 6 trading days. Evidently, things do not look particular good for the common currency. All technical indicators point to more losses especially after the clear break of 1.1500 support area last week. Nevertheless, we may see some buying interest around the 38.2 fibonacci level and even around 1.1265 today’s low. If buying interest is large enough, it will hold the pair from further downside, at least for the next few trading sessions. If sellers remain in control, a break and close below those levels, leaves the pair vulnerable to accelerated losses even as low as 1.1050 area.

Comment from our partner TFI Markets

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