The EUR/USD pair quite significantly dropped yesterday after the release of disappointing industrial production numbers in Europe. The U.S. dollar managed to gain thanks to investor sentiment improvement and a surge in Treasury yields. Support is set at 1.23, resistance at 1.24.
The greenback gained on the back of investor sentiment improvement that pushed Treasury yields and Wall Street indices higher. The dollar index measuring its strength agains six major currencies climbed to 89.758 level, ending a four-day losing streak. The rebound was possible amid a surge in Treasury yields, with that of the 10-year surging to the highest level since March. The dollar also got a boost from a rise of all major indices on Wall Streat. Fears related to the situation in Syria ebbed after Donald Trump suggested that a military strike may not be imminent.
The euro’s situation looks a bit worse at the moment. The common currency initially rose by 0.4% this week thanks to European Central Bank officials comments, suggesting a possible normalization of the bank’s monetary policy. Thursday brought a drop by 0.3%, ending a four-day winning streak after a release of new, disappointing data. Industrial production in the bloc dropped by 0.8% month on month, although a rise by 0.1% was expected. Year on year the numbers came at 2.9%, while 3.5% was expected and the previous reading was 3.7%.
Pic.1. EUR/USD chart.
Uncertainty on the markets has eased and supported the greenback, but the EUR/USD pair was able to defend the current support at 1.23. The economic calendar is rather empty today, and the main event of the day will be the release of University of Michigan sentiment numbers. A strong reading could support the dollar and bring a new attempt to push the pair lower.