- The dollar remains weak, but the losses are limited.
- Wall Street rises sharply, US yields hit fresh two-day highs.
- The short-term outlook for EUR/USD is bullish, facing resistance at 1.0730 and 1.0750.
The EUR/USD continued to rise during the American session and posted a new daily high at 1.0729. It then pulled back, holding above 1.0700. The euro maintains important weekly gains.
Bullish but limited below 1.0750
EUR/USD’s recovery seems to be resuming after a pullback from the 1.0750 area to 1.0640. The Euro remains below the recent high, but the chart still shows some positive momentum. A break of 1.0730 should clear the way for a test of 1.0750. The next resistance is located at 1.0765. A pullback below 1.0700 would ease the pressure. And below 1.0645, the pair could drop to test the important 1.0600 support zone.
Thursday’s move higher is being driven by US dollar weakness and risk appetite, the day after the FOMC minutes. DXY falls 0.12%, below 102.00. US stock prices rise sharply. The Dow Jones gained 1.72% and the Nasdaq 2.87%.
Improved market sentiment keeps the dollar on the defensive. At the same time, US yields react. The 10-year US bond rose to 2.78% and the 30-year yield 3.02%, both at two-day highs.
US economic data was mixed on Thursday. The second reading of the first quarter GDP showed a negative revision from -1.4% to -1.5%. Initial jobless claims fell more than expected to 210,000, while continuing claims rose to 1.34 million, above the 1.31 million market consensus. The Kansas Fed manufacturing index unexpectedly fell in May to 19 from 28, against an expectation of 37. US personal income and spending data, including core PCE, will be released on Friday.
Awaiting a long weekend in the US, EUR/USD is holding onto significant weekly gains as it continues to recover from multi-year lows. During the last two weeks, he has gained more than 300 pips. “EUR/USD appears to have stalled at the top of a potential 1.02-1.08 range this summer and we could easily see a short-term move towards the 1.0500/1.0550 area as the Fed cycle revalues,” ING analysts explain.
Technical levels
Source: Fx Street
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