EUR/USD breaks below 1.0400 ahead of German CPI

Having faced rejection just below 1.0500 psychological mark, the EUR/USD pair came under intense selling pressure and has now dropped below 1.0400 handle.

Currently trading around 1.0395-90 band, testing session lows, the greenback regained strong traction across the board, with the overall US Dollar Index moving within striking distance of multi-year peaks, and has been the only factor attracting fresh selling pressure around the major. Even today's better-than-expected German employment data failed to provide any respite for bulls and the pair inched closer to nearly 14-year lows touched on Dec. 20. 

Next in focus would be German prelim CPI print for December, in a short while from now, followed by the US ISM manufacturing PMI, later during NA session and would be looked upon for fresh impetus by short-term traders. 

Technical levels to watch

On the downside, immediate support is pegged near 1.0375-70 area, closely followed by multi-year lows support near 1.0350 region ahead of Jan. 2003 lows support near 1.0335 level. On the upside, 1.0420 level now becomes immediate resistance above which the pair could recovery back to 1.0445-50 hurdle en-route 1.0500 psychological mark.