- EUR/USD turns positive as the US dollar corrects lower.
- DXY falls for the first time in nine trading days.
- On Thursday, the ECB will announce decisions on monetary policy.
The EUR/USD rallied strongly during the last hours and rose from 1.0820 to 1.0878, reaching a new daily high. The move higher took place amid a decline in the US dollar across the board. The dollar lost momentum as US yields turned lower.
The US 10-year bond yield fell from 2.75% to 2.65%, hitting the lowest level since Friday, while the 30-year Treasury bond yield fell from a multi-year high of 2.87% at 2.76%. The rally in Treasury bonds weighed on the dollar.
DXY is down 0.28%, ending an eight-day positive streak. It’s hovering around 100.00. It’s the first strong sign of a pause in the dollar’s rally. Under that scenario, the EUR/USD could benefit, but an event risk for the euro is looming.
On Thursday, the European Central Bank (ECB) will announce its decision on monetary policy. A more aggressive approach to inflation is expected. Analysts at TD Securities see a “sharp turn from the ECB this week, with an announcement that the APP will end at the end of May, and a clear signal that rate hikes will follow.” They still see the euro under pressure and expect short-term rallies to fade.
EUR/USD supported by 1.0800
EUR/USD once again, like last month, found support above 1.0800 and is rallying. Despite moving away from that critical area, risks remain skewed to the downside. A break below 1.0800 should clear the way for more losses.
If the up move gains momentum, next resistance could be seen at 1.0900 and above a more important barrier at 1.0940. A daily close above 1.0940 should relieve bearish pressure.
Technical levels
Source: Fx Street
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