EUR/USD moves further south, near 1.2420

• Spot drops to fresh lows near 1.2420.
• US data came in stronger than expected.
• US 10-year yields around 2.85%.

The buying pressure around the greenback is now forcing EUR/USD to intensify the daily drop to the 1.2425/20 band.

EUR/USD offered on upbeat US data

USD-bulls keep coming to the markets after another bout of US releases surprised to the upside once again. In fact, headline US factory orders expanded more than expected 1.7% on a monthly basis in December, while US consumer sentiment tracked by the Reuters/Michigan index improved to 95.7 for the month of January.

These results add to the already upbeat mood following auspicious results from US non-farm payrolls and higher than expected wage inflation figures

Today’s prints have reinforced the case for a March rate hike by the Federal Reserve and are already echoing in yields of the US 10-year note, advancing to fresh multi-year tops around 2.85%. According to CME Group’s FedWatch tool, the probability of higher Fed Funds next month is at almost 78%, based on Fed Funds futures prices.

EUR/USD levels to watch

At the moment, the pair is losing 0.77% at 1.2418 facing the immediate support at 1.2399 (10-day sma) followed by 1.2336 (low Jan.30) and finally 1.2251 (21-day sma). 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).