EUR/USD plunges to 6-day low ahead of German CPI

The EUR/USD pair faded weekly bullish gap opening, dropping over 80-pips from session peak level of 1.0740, and has now dropped to six day low.

Currently flirting with 1.0650 region, the pair came renewed selling pressure and reversed Friday's tepid recovery bounce. Rebounding US treasury bond yields helped the key US Dollar Index to stage a solid recovery from Asian session lows in the vicinity of 100.00 psychological mark touched in the aftermath of Friday's dismal US Q4 GDP growth numbers and the US President Donald Trump's protectionist stance. 

In absence of any fresh fundamental drivers, the US Dollar price dynamics has been an exclusive driver of the pair's movement on Monday. Moreover, possibilities of some stops getting triggered, on a sustained weakness back below 1.0700 handle, could have also collaborated to the pair's sharp slide in the past hour or so. 

Focus now shifts to the upcoming release of preliminary German CPI print, which is expected to recorded a yearly rise of 2.0% during the month of Jan. Later during NA session, the Fed preferred inflation gauge tracked by the Core PCE Price Index accompanied by Personal Income/Spending data and followed by Pending Home Sales would also be looked for some trading cues.

Technical levels to watch

The pair has failed to defend 1.0700 handle and hence, a subsequent retracement below 1.0660-50 horizontal support would turn the pair vulnerable to head back towards 1.0600 handle before eventually dropping to test 50-day SMA support near 1.0585 region.

On the upside, any recovery attempt might now confront immediate resistance near 1.0700 handle, which is followed by resistance at session peak near 1.0740 region. A convincing move above 1.0740 resistance seems to accelerate the up-move towards 1.0765-70 strong hurdle.