- EUR/USD bottomed at 1.1319 and returns to the 1.1355 zone.
- US dollar mixed across the board due to risk aversion and rising yields.
- Wall Street extends gains, S&P 500 rises 1.50%.
The EUR/USD quickly recovered from a drop to 1.1320 and rose back to the 1.1350 area. It maintains a bullish tone and is trading at daily highs at 1.1361.
EUR/USD gains on stronger euro, dollar mixed
Stock prices have risen around the world. In Europe, the main indices finished with a gain of 1.25%. On Wall Street, the Dow Jones gained 1.31% and the Nasdaq 1.90%. The rally was sparked by the easing of tensions on Ukraine’s borders.
The improvement in risk sentiment pushed bond prices lower. Euro zone and Treasury yields rose significantly, particularly boosting the euro. EUR/GBP rose more than 40 pips, trading near 0.8400, while EUR/JPY rose towards 131.50.
The US dollar is declining modestly across the board, although it is trading higher against the yen on the back of rising yields. The 10-year US bond yield rose from 1.97% to 2.05%. It peaked after the release of US data that showed the producer price index rising in January above expectations. The retail sales report is due on Wednesday.
Short term outlook
If the EUR/USD extends the rally, the next resistance could be seen at the 1.1375 area, followed by 1.1400 and 1.1425. The positive tone is likely to hold as long as the pair remains above 1.1330 (20-hour moving average); a break lower should weaken the euro, exposing support at 1.1320.
Technical levels
Source: Fx Street
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