- The US dollar is headed for significant weekly gains across the board.
- Higher US yields and weaker sentiment weigh on EUR/USD.
- The pair are experiencing their worst week since September 2022.
EUR/USD fell on Friday for the fourth time in five days, extending its weekly losses. The pair is hovering near 1.0850, a monthly low, consolidating a weekly loss of more than 150 pips.
A key factor is an overall stronger US dollar. The combination of a cautious tone in equity markets and higher US yields is strengthening the dollar.
The US dollar index is 0.60% higher on Friday, trading above 102.50, at its highest level in a month. The Dow Jones fell 0.31% and the Nasdaq fell 0.53%. The US 10-year is at 3.44% and the 2-year is close to 4%.
Short-term outlook
The euro has had its worst week against the US dollar since September 2022. Short-term bias for EUR/USD is bearish. “The 1.0800 level is natural immediate support, en route to 1.0745, which is the 61.8% retracement of the 2022 annual decline. A break below the latter should open the door to a longer-term recovery for the USD. The 1.0980/1.1000 area will be difficult to break now, although if the pair manages to recover above it, 1.1100 is a possible target,” said Valeria Bednarik, chief analyst at the firm FXStreet.
