EUR/USD weaker, flirting with lows near 1.0550

The increasing bid tone around the buck has prompted EUR/USD to abandon the area of recent highs and retreat towards the current 1.0555/50 band, or daily lows.

EUR/USD attention to data

The pair is now losing ground for the second consecutive session, coming down to test multi-day lows in the mid-1.0500s amidst a solid rebound in the demand for the US Dollar.

In fact, expectations of a rate hike by the Federal Reserve at its meeting later this month have been boosted following supportive Fedspeak as of late. While Trump’s SOTU speech on Tuesday failed to shed more light on his plans on spending and tax reforms, investors deemed the tone as fairly positive (at least not negative), collaborating in turn with the improved mood around the buck.

EUR/USD gained extra downside pressure following a sharp pick up in US yields vs. the rest of its G10 peers.

Looking ahead, final February prints of the Manufacturing PMI in Euroland are unlikely to grab some attention, although market participants will closely follow the preliminary inflation figures in Germany during last month.

Across the pond, US ISM Manufacturing should be the salient event, seconded by Personal Income/Spending, January’s inflation gauged by the PCE, Markit’s Manufacturing PMI and the speech by Dallas Fed R.Kaplan (voter, hawkish). Closing the docket, the Fed will publish its Beige Book.

EUR/USD levels to watch

At the moment the pair is losing 0.18% at 1.0558 and a breach of 1.0492 (low Feb.22) would target 1.0452 (low Jan.11) en route to 1.0339 (2017 low Jan.3). On the flip side, the next hurdle lines up at 1.0630 (20-day sma) followed by 1.0632 (high Feb.28) and finally 1.0682 (high Feb.16).