- The dollar gains momentum amid risk aversion and rising yields in the US.
- April manufacturing PMI unexpectedly up.
- EUR/USD is approaching the 1.0640 support zone.
The EUR/USD It broke lower after trading for hours in the range between 1.0730-1.0700 and fell to 1.0650, reaching the highest level since May 25. The pair remains under pressure as the dollar benefits from rising US yields and risk aversion.
Stocks and treasuries fall
After a positive opening, the prices of shares on Wall Street suffered a sharp drop after the publication of the US data. The figures, better than expected, keep the Federal Reserve on the path of aggressive rate hikes.
The ISM Manufacturing PMI rose in May to 56.1 from 55.4 in April, above the 54.5 market consensus. The unexpected surge in activity buoyed the dollar and weakened demand for Treasuries. The 10-year US bond yield rose from 2.84% to 2.93%, the highest level since May 22, and the 30-year bond rose to a weekly high of 3.08%.
On Wall Street, the Dow Jones falls 0.75% and the Nasdaq 0.43%. The negative turn in stock prices further boosted the dollar. DXY rises 0.70% and stands around 102.50, the maximum in a week.
From a technical point of view, the area between 1.0640/50 is a strong support; below, the next target is at 1.0605. If EUR/USD manages to hold above 1.0650, the Euro could initially rally to 1.0700. Above, the next resistance lies at 1.0735.
Technical levels
Source: Fx Street
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