EUR/USD drops to five-day lows below 1.2070 as USD preserves its strength
- EUR/USD is struggling to recover above 1.2100 on Monday.
- US Dollar Index is approaching 91.00 in American session.
- Macroeconomic data releases failed to trigger a significant market reaction.
The EUR/USD pair spent the Asian session fluctuating in a relatively tight range near 1.2120 but came under strong bearish pressure in the early trading hours of the European session. After dropping below 1.2100, the pair struggled to stage a meaningful rebound and touched its lowest level in five days at 1.2064. As of writing, EUR/USD was down 0.55% on a daily basis at 1.2069.
USD valuation drives EUR/USD movements
Earlier in the day, the data published by the Eurostat showed that the Unemployment Rate in the euro area remained unchanged at 8.3% in December as expected. Additionally, the IHS Markit's Manufacturing PMI came in at 54.8 in January's final reading, slightly better than the flash estimate of 54.7.
These data were largely ignored by the market participants and major European equity indexes posted strong gains at the start of the week. However, the shared currency failed to capitalize on the upbeat market mood and the broad-based USD strength caused EUR/USD to turn south.
The US Dollar Index is currently at its highest level in more than a month at 90.97, rising 0.43% on the day. The data from the US revealed that business activity in the manufacturing sector continued to expand at a strong pace in January.
Later in the day, investors will be paying close attention to headlines coming out of US President Joe Biden's meeting with Republican senators to discuss the $600 billion coronavirus relief bill.
Technical levels to watch for