- The dollar continues to retreat after last week’s rally.
- EUR/USD rises for the third day in a row.
- Price at highs since last Wednesday, bounces almost 150 pips from recent low.
The EUR/USD is rising for the third in a row on Tuesday, having already recovered almost 150 pips from the 1.1120 low. In the European session, the pair reached 1.1269, the highest level since last Wednesday, supported by the general retreat of the dollar.
The drop in Treasury bond yields, due to a certain moderation in the expected trajectory of the monetary tightening by the Federal Reserve, is playing against the dollar at this time. In turn, equity markets are in the green, contributing to dollar weakness.
EUR/USD after encountering resistance in the 1.1270 area, corrected lower but remains above 1.1250 for now, positive tone intact. Below support looms at 1.1235 where the 20 hour moving average is passing.
Known and unknown facts
When it comes to economic data, Europe first saw a drop in German retail sales of 5.5%, much larger than the expected 1.2% decline. Another German report showed a drop in the unemployment rate from 5.2% to 5.1%. The final reading of the PMI for the region had corrections and the general manufacturing index for January was revised from 59 to 58.7.
The key event will be on Thursday with the meeting of the European Central Bank. The euro may receive support in the preview, given the growing expectation of some mention of a possible adjustment to deal with the rise in inflation.
In the US, the economic calendar for Tuesday highlights the final reading of the PMI, the ISM manufacturing index for January and the survey of job advertisements. This will serve as a preview for Wednesday’s employment ADP report and Friday’s official report, which includes non-farm payrolls.
Technical levels
Source: Fx Street
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