EUR/USD extends the drop below 1.2400 ahead of US data

• The buying pressure around the buck keeps weighing on spot.
• The pair shed around a big figure following tops near 1.2480.
• EMU’s data releases failed to meet expectations. US Consumer Confidence next on tap.

The greenback is extending the daily reversal and is now dragging EUR/USD to test fresh lows in the 1.2380/70 band.

EUR/USD looks to US data

After surpassing the critical resistance area in the mid-1.2400s in early trade, the pair sparked a correction lower to the 1.2380/70 region on the back of a strong rebound in the buck.

In fact, and tracked by the US Dollar Index (DXY), the buck managed to leave behind lows in the sub-89.00 zone and is now testing 89.60, or 2-day peaks. There appears to be no other catalysts than month/quarter-end flows and alternating risk-appetite trends.

Previously, mixed ECB-speak has also added to the sudden weakness hitting the shared currency. In fact, ECB’s E.Nowotny advocated for a gradual reduction of the current asset purchase programme, while Board member E.Liikanen stressed that the QE programme stays open ended. Previously, V.Vasiliauskas agreed with market forecasts for a rate hike at some point in mid-2019, adding that further discussion on changes to monetary policy is expected in June. In addition, J.Makuch noted inflation in the region continues to lack convincing traction,

On the US data front, the S&P/Case-Shiller index expanded at an annualized non-seasonally-adjusted 6.4%, beating initial estimates. Later, the Conference Board will publish its gauge of March Consumer Confidence.

EUR/USD levels to watch

At the moment, the pair is retreating 0.43% at 1.2389 facing immediate contention at 1.2344 (10-day sma) followed by 1.2241 (low Mar.21) and finally 1.2206 (low Feb.9). On the flip side, a break above 1.2477 (high Mar.27) would target 1.2537 (high Jan.25) en route to 1.2557 (2018 high Feb.16).