EUR/USD drops to daily lows near 1.1300, dollar extends gains

• EUR/USD slips back to the 1.1300 zone, or new daily lows.
• The greenback gains on higher US yields across the curve.
• US Manufacturing PMI eased a tad to 57.7 in December.

Further improvement in the US dollar keeps the risk appetite subdued and sends EUR/USD to the area of daily lows around 1.1300 at the beginning of the week.

EUR/USD weaker on dollar strength

EUR/USD extends the rejection from recent tops in the 1.1380/90 band and slowly approaches the 1.1300 neighbourhood, where the 20-day SMA also coincides.

The deep knee-jerk in spot came on the back of persistent dollar upside, which is in turn sustained by the move higher in US yields.

Earlier in the euro docket, Markit’s final Manufacturing PMI in Germany came at 57.4 in December and 58.0 in the broader Euroland. Across the pond, the Manufacturing PMI dropped marginally to 57.7 in the same period ahead of November’s Construction Spending.

EUR/USD levels to watch

So far, spot is losing 0.67% at 1.1306 and faces the next up barrier at 1.1386 (monthly high November 30) followed by 1.1464 (weekly high Nov.15) and finally 1.1520 (200-week SMA). On the other hand, a break below 1.1273 (weekly low Dec.29) would target 1.1221 (weekly low Dec.15) en route to 1.1186 (2021 low Nov.24).