EUR/USD challenging daily lows near 1.1720

The single currency remains on the defensive during the first half of the week, with EUR/USD now coming down to test the 1.1720 region, or session troughs.

EUR/USD now looks to US data

Spot is so far posting losses for the second session in a row, shedding over a cent since Friday’s tops near 1.1840 in the wake of the release of US inflation figures for the month of July.

The pair remains under pressure this week as markets keep adjusting to the US-GE yield spread differentials, which continues to favour the buck as of late.

In addition, hawkish comments from NY Fed W.Dudley on Monday also helped the sentiment around the greenback and removed some scepticism over the likelihood of the third rate hike by the Federal Reserve in H2. Dudley comments prompted yields of the key US 10-year to return to the 2.25% level, or 3-day tops.

On another front, EUR speculative net longs climbed to the highest level since late December 2011 in the week to August 8, as shown by the latest CFTC report.

Later in the NA session, the pair should come under pressure in light of the publication of US retail sales seconded by business inventories, the NY Empire State index, the NABH index and TIC flows.

EUR/USD levels to watch

At the moment, the pair is retreating 0.37% at 1.1736 and a breakdown of 1.1687 (low Aug.9) would open the door to 1.1611 (low Jul.26) and finally 1.1554 (4-month up trend). On the other hand, the next up barrier is located at 1.1846 (high Aug.11) seconded by 1.1894 (high Aug.3) and finally 1.1911 (2017 high Aug.2).