EURUSD Hits New Low Post Powell’s Speech

EUR/USD extended losses on Tuesday and has declined to a new 2018 low. The pair has been under pressure over the past three weeks on the back of a stronger dollar and has dropped nearly 4% to 6% during that time. Europe’s single currency now trades at a 2018 year-to-date loss against the Dollar after a crushing onslaught by the greenback drove the world’s most widely traded currency pair down more than 3% during the month to May 08.

EURUSD Suffers

The pair hit fresh low of 1.18362 early today morning despite hawkish German trade balance and industrial production data. Macro data for various European countries released yesterday was either hawkish or remained neutral, but the pair was unable to capitalize on this trigger owing to increase in bet in favor of exceptionally strong US dollar. The US dollar got a boost earlier in the day by strong hawkish comments from Fed’s chairman Jerome Powell but bears are trying to erase the gains.

US President Trump’s speech on Iran deal was in line with public expectations. Trump announced that USA is pulling out of the deal with Iran while other allies involved in the agreement such as Germany, France and U.K have decided to continue abiding by the agreement. However Israeli Prime minister Benjamin Netanyahu said he “fully supports” Trump’s decision. Even if announcement has been made, based on comments from US officials it is expected that it would take time for U.S to pull out of deal and investors believe that it will not affect value of US dollar in long term even if it results in some volatility in short term.

The pair is expected to see further decline during today’s trading session as European calendar is very light for the day with no major news that could help offset existing trend. Investors are on look out for core PPI YoY & MoM data from US to be released later today. A better than expected US macro data could push the price as low as 1.17650 within today’s trading session.  Expected support and resistance for the pair are at 1.1809 / 1.1785 and 1.1890 / 1.1910 respectively.