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.
- 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
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