The EUR / USD pair continued its rapid decline, falling below the 1.21 level. The euro is succumbing to the strengthening of the dollar, which sends the world’s most popular pair to levels last seen on May 14, four weeks ago.
The dollar reacts positively to the upbeat US consumer sentiment index. The University of Michigan preliminary June index surprised at 86.4, reversing previous growth and pointing to more sustainable consumption going forward. The decline in the inflationary expectations component was apparently ignored by the markets.
On Thursday, the dollar failed to take advantage of the strong inflation readings in May. The core CPI jumped to 5%, while the core CPI reached 3.8%, both levels last seen several years ago. Friday’s move may be a belated response to this release, as well as a change in traders’ stance ahead of the Federal Reserve’s decision next week.
The euro / dollar rate fell to the round level of 1.21, which was also the previous low in June. At the time of writing, the currency pair has hit a low of 1.2092. Further support is expected at 1.2055 and resistance above 1.21 is expected at 1.2145.
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