EUR/USD weaker, closer to 1.2300

• Spot tested levels below key 1.2335.
• USD picks up extra pace.
• Bullard noted payrolls number was ‘good’.

The selling pressure around the European currency remains well and sound on Tuesday and is now forcing EUR/USD to break below the critical 1.2330 support area.

EUR/USD offered on strong USD

The demand for the US Dollar keeps gaining ground during the first half of the week and has motivated spot to slip back to the low-1.2300s, where sits the key support around 1.2330.

The sharp rebound in volatility has seen the VIX index (‘panic index’) jump to the area above the critical 50.0 mark, levels last seen in early August 2015. It is worth mentioning that VIX was navigating the 13.0 area at the beginning of the current month.

In the meantime, the pair is eroding the accelerated support line off YTD lows seen in early January and is now facing the likelihood of further weakness with the interim target at the 21-day sma, today at 1.2284.

On the data front, December’s US trade deficit widened more than initially forecasted to $53.1 billion, while the IBD/TIPP index and JOLTs jobs openings are next on tap in the US docket.

EUR/USD levels to watch

At the moment, the pair is losing 0.15% at 1.2349 facing the immediate support at 1.2323 (low Feb.6) followed by 1.2284 (21-day sma) and finally 1.2165 (low Jan.18). On the other hand, a breakout of 1.2522 (high Feb.2) would target 1.2537 (2018 high Jan.25) en route to 1.2571 (high Dec.16 2014).