EUR/USD drops below 1.2080, hits one-week lows

• US dollar rises across the board as Wall Street turns negative.
• EUR/USD heads for the fourth consecutive daily loss under 1.2100.

The EUR/USD broke below 1.2095 and dropped to 1.2071, reaching the lowest level in a week. As of writing, it trades near the lows, under pressure, about to post the fourth consecutive daily loss.

US dollar recovers momentum

A recovery of the US dollar, particularly against European majors weakened the EUR/USD. The US Dollar Index (DXY) rose above 91.00, the highest in two days. Deterioration in risk sentiment and higher US yields supported the greenback.

Also technical factors weighed in the euro. The slide under the key short-term support area of 1.2100, added pressure. Under 1.2070, the next support is seen at 1.2040. A recovery back above 1.2100 would alleviate the negative bias.

Key day ahead

On Thursday, the economic calendar shows the US will report on weekly jobless claims and inflation. The key event for the EUR/USD will likely be the European Central Bank meeting. Action is expected from the central bank.  “This ECB meeting has many moving parts with decisions on PEPP and TLTROs, plus new macro forecasts. Press conference tone to be the ultimate market driver, with signals from 2023 HICP forecast and whether ECB commits to using full PEPP”, explained analysts at TD Securities.

Technical levels to watch