EUR/USD drops below 1.19 while DXY goes up

The selling pressure uninterrupted in the pair EUR/USD pushed to a new minimum weekly 1.1880 during the american session as the greenback is continuing to gather strength against its major rivals. At this time, the pair is trading at 1.1890, losing 0.7% on the day.

The news of a tax reform possibly completed before the end of 2017 in the united States brought a wave of buying in us dollars during the first hours of trading of the second half of the day. During an interview with the Associated Press, Paul Ryan, Chairman of the House of Representatives of the united States, said that the tax reform was designed to fix the tax system and to boost economic growth and added that a draft would be published during the week of September. According to Ryan, they had the aim of enacting the law before the end of the year.

In the later part of these observations, the DXY advanced to a new high weekly 92.50 and was last seen at 92.38, gaining 0.53% in the day.

Once again, the economic calendar will be fairly quiet from the euro zone on Wednesday. Later in the american session, the requests weekly unemployment in the united States will be followed by the inflation data at the consumer level. It is expected that the CPI of the united States improve to 1.8%, from 1.7% yoy in August. A higher reading than expected could allow the greenback to extend its gains in the second half of the week.

Technical perspective

The RSI indicator in the chart of four hours has not yet reached level 30, suggesting that the pair could continue its downward trend in the short term before making a technical correction. The level 1.1820, where is located the trend line coming from April, which is a critical support for the pair. A break below this level could open the door to further losses towards 1.1770 (minimum of 25 August) and 1.1660 (minimum of 17 of August). On the positive side, resistances line up at 1.1915 (DMA 20), 1.2000 (psychological level) and 1.2090 (maximum of September 8).

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