- The euro is having the best day in two weeks against the dollar.
- EUR/USD is starting to firm up above the 20-day moving average, which is flattening.
- DXY falls after several days of gains.
The EUR/USD is rising strongly on Tuesday, climbing to 1.1056, the highest level in a week. The euro rises more than 50 pips, showing a rebound from the multi-day low at 1.0940 to which it fell on Monday.
If confirmed at current levels, the EUR/USD would cut several days with a bearish bias and moderate runs. The rise and previous relative stability have led the price to rise above the 20-day moving average (1.1002) and it is about to flatten out, which would be a positive sign for the euro in the short term.
Should it lose strength and return below 1.1000, the euro would show that weakness is still present. A daily close below 1.0970 would enable further downside.
EUR/USD gains come despite US Treasury yields remaining near multi-year highs. The strength of the euro comes from the change to a tone more in favor of monetary tightening by officials of the European Central Bank (ECB). This leads to the European rate market now pricing in hikes of up to 100 points over the next twelve months.
Part of the traders’ attention is on the situation in Ukraine and what can be achieved in the current round of talks. Regarding data, on Tuesday in the US it will be the turn of house prices, job announcements and consumer confidence. In the coming days key figures will come out of the labor market. As for speeches, Fed central bankers Harker and Williams will speak in public.
Technical levels
Source: Fx Street
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