EUR/USD plummets below 1.19 as DXY pushes higher toward mid-92s

The unabated selling pressure on the EUR/USD pair pushed it to a fresh weekly low at 1.1880 in the NA session as the greenback continues to gather strength against its major rivals. As of writing, the pair was trading at 1.1890, losing 0.7% on the day.

News of a tax reform possibly being finalized before the end of 2017 in the U.S. brought a wave of USD buying during the early trading hours of the second half of the day. During an interview with the Associated Press, Paul Ryan, Speaker of the U.S. House of Representatives, said that the tax reform was designed to fix the tax system and boost the economic growth and added that an outline was going to be released during the week of September. According to Ryan, they were aiming to enact the law before the end of the year.

• US House Ways & Means Chair Brady: To release tax plan on week of Sep 25th
• U.S. House Speaker Ryan: Goal is to have tax reform enacted into law by year's end

On the back of these remarks, the DXY advanced to a new weekly high at 92.50 and was last seen at 92.38, gaining 0.53% on the day.

Once again the economic calendar will be fairly quiet from the euro area on Wednesday. Later in the NA session, weekly jobless claims from the U.S. will be followed by the consumer inflation data. The CPI in the U.S. is expected to improve to 1.8% from 1.7% on a yearly basis in August. A higher-than-expected reading could allow the greenback to extend its gains in the second half of the week.

Technical outlook

The RSI indicator on the H4 chart still hasn't reached the 30 mark, suggesting that the pair could continue its downtrend in the short-term before making a technical correction. 1.1820, where the trend line coming from April is located, is a critical support for the pair. A break below this level could open the door for further losses towards 1.1770 (Aug. 25 low) and 1.1660 (Aug. 17 low). On the upside, resistances align at 1.1915 (20-DMA), 1.2000 (psychological level) and 1.2090 (Sep. 8 high).

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