- The euro falls back to 1.1640 from three-week highs at 1.1640.
- The dollar is losing ground as the rally in US bond yields stalls.
- EUR / USD: Above 1.1665, the pair could reach the mid-range of 1.17 – Scotiabank.
The euro it extended its recovery on Tuesday, driven by a positive market environment, to hit the upper range of 1.1600 for the first time since late September. The pair EUR/USD it then fell back, to consolidate well above 1.1600, putting some distance from the 15-month low reached last week, at the 1.1520 area.
The weakness of the US dollar is giving the euro a break
The common currency was buoyed by a weaker dollar on Tuesday. The US dollar is losing ground, weighed down by a pause in US Treasury yields, which had risen to multi-month highs in recent weeks, amid growing expectations of a gradual reduction in QE. by the Federal Reserve.
Additionally, market optimism, with Johnson & Johnson’s and Travelers posting better-than-expected quarterly earnings, has revived the optimism seen last week following upbeat reports from major banks, increasing demand for riskier assets. As a result, the US Dollar Index is trading roughly 0.25% lower on the day, after bottoming out at 93.45, its lowest level in the past three weeks.
On the macroeconomic front, construction activity in the United States has shown an unexpected contraction in September, revealing that the shortage of raw materials and labor is beginning to put pressure on the construction sector and may have a negative impact on the economic growth of the third trimester. Homebuilding declined 1.6% in September, and the August reading has been revised down to 1.2% growth from the previously estimated 3.9%.
EUR / USD: 1.1665 breach could send pair to 1.17 midrange – Scotiabank
Scotiabank’s currency analysis team believes the pair is trading near a key resistance level that could provide further impetus to the EUR / USD rally – the EUR / USD rally has been extended to retest resistance 1.1665, so it will be critical to determine if this rally in the EUR extends or begins to wane (…) A momentum above 1.1665 will take the EUR to mid-1.17. “