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EUR/USD rejected at 1.0950, drops to key support

FXStreet (Mumbai) - EUR/USD extends its overnight consolidative mode into the Asian session, with renewed selling interest witnessed in last hours, taking the price lower to test NY lows reached at 1.0925.

EUR/USD: Bears retain control

Currently, the EUR/USD pair loses -0.11% and trades at fresh session lows of 1.0930, heading towards key support located near 1.0925 region – the confluence of 5-DMA and NY low. Fresh offers ran through the EUR/USD pair after the US dollar regained upside momentum on returning risk-on trades with Japanese markets attempting recovery from the recent slump. Japan’s Nikkei rallies 1.22% to 19,282 points.

Moreover, markets shrugged off oil price weakness and preferred to hold the US currency amid a slew of ECB officials’ speeches delivered on Thursday, justifying ECB’s Dec disappointment. Moreover, the euro remains undermined against the American dollar on divergent monetary policy outlook between both continents, with the ECB turning out less dovish last week while the Fed appears on track to raise rates next week.

Millan Mulraine, deputy chief economist at TD Securities, noted, “The runway has been cleared for the liftoff in rates next week, and with near unanimity among professional forecasters and the market pricing in above-80% odds of a hike, the focus will be less on what the Fed does and more on what they say about the future path of rates. The consensus expectations appears to be for the Fed to deliver a dovish hike. However, we see limited scope for the Fed to deliver on this."

Meanwhile, the major will continue to take cues from the sentiment on the global equities ahead of a flurry of significant US macro releases, including retail sales, PPI and consumer sentiment, due later today.

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EUR/USD Technical Levels

The pair drops below 1.0950, with the immediate support seen at 1.0908/00 (1h 100-SMA/ round number). Selling pressure will intensify below the last, dragging the pair towards 1.0877 (50-DMA). To the upside, the immediate hurdle lies at 1.0950/53 (daily high/ 1h 20-SMA) beyond which 1.0967 (daily pivot) could be tested.

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