EUR/USD: A test of 1.2000 inevitable as DXY breaks through 92.00
- Labour Day holiday-thinned markets accentuating Euro’s downfall.
- Further downside in play as King dollar rules the roost.
The steady decline in the EUR/USD pair received extra legs in the European session, after the USD bulls flexed their muscles across the board, tracking the rally in Treasury yields.
The relentless rise in the greenback against its major peers is mainly driven by the divergent monetary policy stance between the Fed and global central banks, as stronger US economic growth prospects point to a faster pace of Fed tightening in the months ahead, with a June Fed rate hike almost priced-in by markets.
More so, with the DXY having finally surpassed the key 200-DMA resistance at 92.00 levels for the first time since May 2017, the EUR bears now look to test the critical 1.2000 levels against its American counterpart, leaving doors open for further downside.
The sell-off in the major is further fuelled by holiday-thinned light trading, as most of the major European markets are closed for Labour Day. On the data front, the pair now awaits the US ISM manufacturing PMI for fresh incentives while the FOMC decision due tomorrow could offer fresh direction to the pair.
EUR/USD levels to watch
FXStreet’s Analyst, Yohay Elam writes: “Below $1.2055, support awaits at the round number of $1.2000. The round figure also converges with the all-important 200-day Simple Moving Average. Further below, the early January low of $1.1920 is the next level to watch. Looking up, the 2017 peak of $1.2090 is worth watching. Higher, the March 1st low of $1.2155 switches to support. Moving higher, recent troughs at $1.2210 and $1.2240 follow.”