EURUSD: Will the pair continue falling?

The dollar strengthened in early European trading Wednesday, adding to recent gains ahead of the U.S. inflation data. The EURUSD keep sinking for the eighth consecutive day.

The strength in the U.S. dollar and Treasury yields following the NFP did not show signs diminishing on Wednesday as expectations step up about tapering the Fed’s massive asset purchase program before ending the year.

In the wake of rising yield spreads in the U.S. treasury bonds, the greenback is expected to move above its five-month high at 93.20 against the basket of major currencies.

At the time of writing, EUR/USD has already fallen to its year-to-date low near 1.1700, and a break below that level of support could provide the opportunity for further declines to the next level of support around 1.16060.

The consumer price index for July will be released today later and is expected to moderate slightly to 0.5% and the annual pace at 5.3%. The pace of consumer prices rising 0.9% last month was the fastest in nearly 13 years.