EUR/USD under pressure falls to 3-week lows

• US Dollar strengthened during US session after PPI data before FOMC. 
• EUR/USD at lowest since Nov 21. 
• DXY breaks above 94.00 as US yields move to the upside.

The EUR/USD pair continued to move to the downside during the US session and broke below last week lows. It bottomed at 1.1716, reaching the lowest level since November 21. As of writing, it was trading around 1.1720, under pressure. 

A stronger US dollar across the board pushed the pair further to the downside. The greenback gained momentum after PPI data (annual rate reached 3.1% above the 2.9% expected, highest since February 2012) and supported by rising US bond yields. The 10-year yield rose from 2.38% to 2.41%, a 1-week high. 

At the same time, equity prices in Wall Street extended gains. The Dow Jones was up 0.55%, at record highs above 24,500. The DXY was rising further above 94.00 and also on top of a downtrend line. It was last seen at 94.17, the highest in almost a month.

Economic data and positive expectations about the tax bill reform boosted the greenback and equity prices. On Wednesday, more inflation data will be released (CPI) and then, the FOMC will announce its decision. With a rate hike expected, updated projections and the tone of the statement will play a key role and represent a risk to the USD bullish outlook. Another relevant of the week is the ECB meeting on Thursday. 

Technical outlook

EUR/USD negative momentum remains intact. To the downside, immediate support is seen at 1.1710 (Nov 21 low), 1.1680 (Nov 10 high) and 1.1660 (Nov 14 low). On the upside, FXStreet's technical confluence indicator identifies potential resistance levels at 1.1745, 1.1810 and 1.1830.