EUR/USD hammered back to 21-month lows

The EUR/USD pair failed to extend PMI-led recovery move to 1.0500 psychological mark and is now headed back to the lower end of daily trading range.

Currently trading around 1.0475 level, the pair got an initial boost gained some respite from better-than-expected composite Euro-zone manufacturing PMI print for December. The positive effect, however, got negated by slightly disappointing services PMI reading and the pair ran through fresh offers near 1.0500 handle.

Moreover, resurgent greenback buying interest, with the overall US Dollar Index hitting fresh 13-year highs in wake of Wednesday's hawkish FOMC projections, is also contributing to the prevalent bearish sentiment surrounding the major. 

Looking at the broader picture, the pair is trading close to March 2015 lows support near 1.0460 region and hence, a follow through selling pressure would pave way for continuation of the pair's strong depreciating move in the near-term.

Later during NA session, US inflation report might reaffirm the Fed projection of inflation rising back to 2% target range in the medium-term and attract fresh selling pressure around the major. Thursday's US economic docket also features the releas of Philly Fed Manufacturing Index and weekly jobless claims. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, “2015 yearly low stands at 1.0461, meaning that stops should be right below the level. A downward acceleration through 1.0450 then, should lead to a downward extension towards the 1.0400 region, leaving the pair poised to extend its decline over the next sessions. Upward corrections are possible only with disappointing US inflation, with an advance beyond 1.0520 probably sending the pair quickly up to the 1.0550/60 region. Above this last, the pair can go up to the mentioned 1.0600 region, although selling interest will likely cap the recovery.”