EUR/USD continued to decline after the beginning of the American session and bottomed at 1.1130, hitting a fresh 2-week low. The pair then bounced modestly to the upside and it was consolidating around 1.1150, headed toward the lowest close since late-April.
The greenback started to rise yesterday after the decision and the statement of the Federal Reserve. Today it gained more strength after the release of the first round of US economic data (jobless claims, Empire Index, and Philly Fed). The industrial production report came in below expectations but did not weaken the rally of the dollar.
NY Fed: Business activity rebounded strongly
US: Weekly initial claims was 237,000, a decrease of 8,000 from the previous week
US: Industrial production was unchanged in May following a large increase in April
While the US dollar is the top performer on Thursday, the euro is also falling versus its European rivals affected by the decline in EUR/GBP, that turned sharply lower after the 5 - 3 vote from the Bank of England.
Today’s slide of the EUR/USD is significant from a technical perspective. It is ending several days of moves around 1.1200, opening the doors to a continuation of the decline. It is also about to post the first close in months significantly below the 20-day moving average.
“The pair has its next support in the 1.1110/20 region, followed later by 1.1075, the low set on May 18th and a line in the sand, as below it, a steeper decline could be expected towards the 1.1000 figure”, said Valeria Bednarik, Chief Analysts at FXStreet.
In order to remove the short-term negative moment, the euro needs to make a stronger reversal and recover ground above 1.1200.