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EUR / USD rallies driven by dollar weakness and rises towards 1.1630

  • The dollar falls on several fronts with appetite for risk and a decline in Treasury bond yields.
  • EUR / USD again finds support above 1.1590 and bounces.

EUR / USD is cutting some of Monday’s losses and recently hit 1.1625, marking a new high for the day. Hours ago, it had gotten close to the weekly low, but stayed above and bounced.

The rebound is being driven by the weakness of the dollar. The DXY lost 0.12% on Tuesday, following yesterday’s advance and is trading at 93.75. Treasury bond yields continue to decline and the 10-year rate is at its lowest in nearly a week at 1.61%. This occurs one week before the start of the FOMC meeting.

The other factor that is limiting the dollar is the rise in the equity markets. Wall Street had a record close and futures point to an open with gains on average of 0.45%. This continues to stimulate demand for riskier currencies and for the euro over the dollar.

The fall of the EUR / GBP may be a factor that has limited the rebound of the EUR / USD. However, the pair approached the 1.1630 area, where there is short-term resistance, which will then be followed by 1.1650. On the downside, a daily close below 1.1590, where the 20-day moving average is, could spell the end of the ongoing rebound from the low in years.

With regard to the rest of the day, the economic calendar shows as relevant reports the report of housing prices, the sale of new homes and the consumer confidence data, all from the US The focus will also continue on the market bonds and on Wall Street.

Technical levels

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