Euro pressure mounts on stimulus talk

Policy divergence continues to be a key theme and the latest data from the US and Europe suggests EUR/USD is the pair to watch this year.

Source: Bloomberg

Following yesterday’s CPI data from Europe, traders’ conviction on ECB action also seems to be growing and this saw the euro slip further in yesterday’s trade.

Additionally on the greenback side of the equation, the Fed reinforced its data-dependency as far as rates lift-off is concerned. Data has been good and, leading into the non-farm payrolls reading, sentiment around the greenback is positive.

EUR/USD slipped below the key $1.2000 mark at the beginning of the week, which rattled the bulls. Since then the pair has extended its losses to a low of $1.1802 and is just holding on to the $1.1800 handle.

These levels have not been seen since 2006 and the next level to look out for would be down at around $1.1640 if $1.1800 is breached.

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