EUR/USD weaker, breaks below 1.1200

The selling pressure around the single currency is now picking up extra pace, forcing EUR/USD to breach the key support at 1.1200 the figure.

EUR/USD attention to US data

The pair is shedding around a cent since yesterday’s fresh 2017 tops in levels just shy of the 1.1300 handle, boosted in response to the disappointing results from US inflation figures and retail sales during last month.

The Fed’s decision to hike rates by 25 bp and leave another hike on the table at some point in H2, while stressing at the same time that the reduction of the balance sheet should come relatively soon have given extra legs to the buck, motivating the US Dollar Index to rebound from fresh YTD lows and sparking a sharp knee-jerk in spot.

Once again, the inability of the pair to break above the key barrier at 1.1300 handle could prompt investors to think that a significant top is, in fact, in place. This idea is reinforced by the recent movement of open interest in EUR futures.

Nothing appealing data wise in Euroland today, whereas the usual weekly report on the labour market, the Philly Fed manufacturing index for the month of June, May’s industrial production and capacity utilization as well as the NAHB index and TIC flows are all due across the pond.

EUR/USD levels to watch

At the moment, the pair is losing 0.31% at 1.1183 and a breakdown of 1.1165 (low Jun.9) would target 1.1108 (low May 30) en route to 1.1073 (76.4% Fibo of 1.1300-1.0339). On the flip side, the initial hurdle lines up at 1.1296 (2017 high Jun.14) seconded by 1.1300 (high Nov.9) and finally 1.1367 (high Aug.18 2016).

It is worth noting that the constructive stance remains intact while above the near-term support line, today at 1.1166. The bearish divergence in the daily RSI, however, seems to lend further support to a correction lower in the next weeks.