Euro skid hits 3-week low on US yields

The euro slide has continued on Monday, as EUR/USD has fallen for a third straight day. Currently, EUR/USD is trading at 1.2145, down 0.62% on the day.

US dollar flexes muscle

The markets have become accustomed to the US dollar acting as a punching bag for its rivals, and the currency has also recorded significant losses against the euro. However, these days may be over, at least for a bit. The greenback has posted broad gains, and the euro is now finding itself on the defensive.  EUR/USD has registered considerable losses for a third straight day, a sight we haven’t witnessed since October. The pair has shed 1.6% in just three days, and the downward trend could continue this week.

The recent positive sentiment towards the US dollar is largely a result of higher US Treasury yields, which has resulted in a US dollar short squeeze and pushed the greenback to higher levels. The US dollar index continues to move higher and has climbed to 90.67, up 0.67% on the day. The dollar index is putting pressure on a major resistance line at 91.00; a daily close above that line would likely extend the dollar short squeeze. With US yields on the move, investors have been in a forgiving mood despite a dreadful US nonfarm payrolls report on Friday. The economy shed 140 thousand jobs in December, its worst performance since April, when Covid-19 shut down the US economy and nonfarm payroll employment plunged by an unimaginable 20 million jobs. Key economic events can always move the currency markets, but traders should also keep a close eye on the US dollar index.

.

EUR/USD Technical

  • There is resistance at 1.2273, followed by a resistance line is at 1.2324
  • EUR/USD has broken below support at 1.2182 and is testing support at 1.2142. Below, there is support at 1.2091
  • The pair broke below the 10-day MA line and continues to move lower

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

Latest posts by Kenny Fisher (see all)