EUR/USD drops further to test 1.0560 on EZ GDP

The bid tone behind the US dollar picked-up significant pace last minutes, sending the EUR/USD further towards the mid-point of 1.05 handle.

The major extends its bearish momentum into a second day today and reverses almost half of Monday’s rally, as the USD bulls regained control amid a solid comeback staged by the treasury yields across the curve, in wake of the probability of a  March Fed rate hike rising to nearly 90%.

The spot also shrugged-off in-line with expectations Eurozone Q4 GDP revision, as sentiment around the USD emerges the main driver in mid-Europe. All eyes now remain on the US trade balance data for fresh impetus on the pair.

EUR/USD Technical Levels

Karen Jones, Head of FICC Technical Analysis at Commerzbank noted, “The market has remained capped by the downtrend at 1.0639. Focus should shift to last weeks low at 1.0494. Below here we continue to target recent lows at 1.0352/40”.

“The market will remain directly offered below the short term downtrend at 1.0639 and recent high at 1.0679. Above here lies 1.0820/29, which represents the 50% retracement and the recent February high,” Karen added.