EUR/USD drops below 1.12 as greenback gathers momentum

Pressured by the rising demand for the greenback, the EUR/USD pair failed to hold above the 1.12 handle and dropped to a fresh session low at 1.1185 in the NA session. As of writing, the pair is trading at 1.1190, losing 0.43% on the day.

The recent upsurge witnessed in the US Dollar Index seems to be fueled by the rising yields for the U.S. Treasuries, as the improved risk sentiment is making the safer T-bonds less desirable. As of writing, the index is at 97.24, up 0.37% on the day, while the 10-year T-bond yield is rising 1%, at 2.276%. Upbeat PMI data from the United States coupled with the announcement of Trump's budget plan for the fiscal year 2018 is supporting the major equity indexes in the U.S., allowing the risk appetite stay high in the session. At the moment, both the Dow Jones Industrial Average and the S&P 500 are up 0.15% on the day.

• US President's Budget FY 2018: A new foundation for American greatness

There are no more data left in the session, and the next catalyst for the pair could come at 19 GMT, when Minneapolis Fed President Kashkari, who is a voter and a known dove, gives his remarks. However, regardless of the recent dovish comments from different Fed speakers, a June rate hike seems imminent, and investors will be looking for signs on the number of rate hikes planned for the rest of the year.

Technical outlook

The pair could encounter the immediate support at 1.1160 (Monday low) ahead of 1.1100 (psychological level/May 19 low) and 1.1015 (20-DMA). On the flip side, resistances locate at 1.1260 (daily high), 1.1300 (Nov. 9 high) ahead of 1.1365 (Aug. 18 high).

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