EUR/USD drops to one-week lows below 1.1150 as USD strengthens

• The US dollar gains momentum following the release of US data ahead of the FOMC meeting.
• The US Dollar Index is up for the third consecutive day, breaking above 100.50.
• The EUR/USD is accelerating its bearish correction from one-year highs.

The EUR/USD is falling on Thursday, experiencing its worst day in almost a month. The pair dropped to 1.1140, reaching the lowest level in a week. It remains intraday biased towards the downside, hovering around 1.1150 as the US dollar maintains a positive tone.
US data favors US Dollar 

The US weekly jobless claims report showed a decline in initial claims to 228K, the lowest level since mid-May and better than the market estimate of 242K. However, in a different report, Existing Home Sales dropped from 4.3 million to 4.16 million (annual rate), below the expected 4.2 million. Data from the Eurozone showed that Consumer Confidence, as measured by the flash estimate for July, improved from -16.0 to -15.1, which was better than expected.

The US job market figures continue to reflect a tight labor market, which contributes to the performance of the US dollar ahead of next week's FOMC meeting. Market participants expect the Federal Reserve to raise rates by 25 basis points on Wednesday. The US 10-year bond yield stands at 3.85%, the highest since July 13, while the 2-year yield is at 4.87%, the highest since July 12. The US Dollar Index climbed from 100.30 to 100.75, reaching the highest level in a week. Stocks on Wall Street are mixed, with the Nasdaq down by 1.15% and the Dow Jones up by 0.71%.

EUR/USD turns negative in the very short-term 

The dominant uptrend in EUR/USD remains firm, however, in the short-term, bearish signals are reasserting themselves. Prices turned decisively lower on Thursday after being unable to break above 1.1230. It easily broke under 1.1200 and is now testing 1.1150.

In the short-term, technical indicators are biased to the downside. The next support level is seen around 1.1120/25 followed by 1.1070. On the upside, 1.1190 could be seen as the immediate resistance, followed by 1.1230. A recovery above 1.1240 would negate the current negative bias.

Technical levels