EUR/USD erases gains but remains above 1.0600 supported by a strong euro

• The euro remains firm in the market as German bond yields continue to rise.
• The dollar is favored by risk aversion.
• EUR/USD remains above 1.0600, trading sideways.

EUR/USD is trading around 1.0620/30, unchanged from Thursday’s close. The euro remains among the best performing currencies after the ECB meeting and after the Eurozone PMI datasupported by the rise in sovereign bond yields.

The pair rallied hours ago to 1.0662, but then reversed course and erased intraday gains. It bottomed out at 1.0609. The 1.0600 zone is key short-term support, which if it gives way could lead to a downward acceleration. On the upside, a confirmation of 1.0660 would target the 1.0700 area.

Thursday the European Central Bank (ECB) raised benchmark interest rates by 50 basis points as expected. At the press conference, christine lagarde I point out that they expect three raises more than 50 points. This reflects the view of several central banks that they are willing to continue tightening monetary policy to control inflation.

This decision to continue rising even to lead to a recession is currently weighing on the global financial markets, which are falling again. Also contributing were lower-than-expected US economic data released on Thursday. In this context, the dollar is strengthening throughout the market, but the euro is following suit.

The common European currency is being favored by a significant rise in sovereign bonds. The German 10-year title went from being at 1.95% before the ECB, to rising to 2.20%. US bonds remain stable.

The Eurozone preliminary PMI readings for November were released on Friday. The composite index showed an improvement from 47.8 to 48.8, beating the market’s expectation of a reading of 48. US PMI will be released later.

technical levels