Hopes that EUR/USD might have put in a bottom for this slide have been dashed after dismal European economic data and a dose of political uncertainty increased downward pressure. EUR/USD bulls had looked for upside follow-through to the February bull engulfing candle.
The big downside surprise to euro zone December industrial production reinforced views that Europe's slowdown is not transitory, as the ECB had suggested, leaving the euro on its heels.
Meanwhile, Spain's parliament rejected the government's budget proposal nL5N20833C, increasing political uncertainty and the chances of early elections.
Upside surprises to U.S. core and headline CPI (y/y) have further depressed EUR/USD longs nL1N2080JB as the pair erodes much of the February 12 rally.
The upside CPI beats have sent U.S. Treasury yields higher while Eurodollar and fed funds futures have basically price out anticipated Fed rate cuts.
yield spreads widened after the CPI, helping to push EUR/USD lower.
Immediate support sits near 1.1250.
A break there will put the 2018 low and 1.1200 psychological level in play.
A break of those supports suggests the longer-term bear trend will resume.
chart: Click here