- EUR / USD loses more momentum, trading closer to 1.2200.
- Demand for the dollar accelerates despite bearish returns.
- R.Quarles of the FOMC talks later on “Economic Outlook.”
The EUR/USD it is now under additional selling pressure and is gradually approaching support at the 1.2200 area.
EUR / USD weakened by the recovery of the dollar
The selling pressure around the single currency is now gathering steam, relegating the EUR / USD to the lower end of the daily range, just a few pips above 1.2200.
Profit taking combines with the dollar rally to drag the pair lower, losing more ground after posting new monthly highs at the 1.2265 / 70 area on Tuesday.
The stance offered in the European currency also comes in response to the fall in German 10-year Bund yields to -0.20%, all after rising to the -0.07% zone sometime in the past week.
On the agenda, French consumer confidence improved to 97 for the month of May (from 95). On the other hand, MBA mortgage applications were down 4.2% from the previous week, while the EIA’s weekly report on crude oil inventories will close the calendar ahead of R. Quarles’ speech from the FOMC.
What to look for around EUR
EUR / USD made new 4-month highs near 1.2270 on Tuesday. The move remains largely underpinned by improving sentiment in risk appetite and a persistent sell-off in the dollar amid growing optimism about the recovery in the euro area, which in turn appears supported by the weaker pace. firm launch of the vaccine. Additionally, better-than-expected key fundamentals coupled with rising morale on the block also underpin the upbeat mood surrounding the pair.
Technical levels
So far, the pair is shedding 0.23% at 1.2220 and a break below 1.2051 (May 13 weekly low) would target 1.1985 (May 5 monthly low) en route to 1.1968 (200-day SMA). On the other hand, the next obstacle is located at 1.2266 (monthly maximum of May 25) followed by 1.2300 (round level) and finally 1.2349 (maximum of January 6).
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