- The dollar loses strength against the main European currencies.
- EUR/USD bounces on dollar weakness.
The EUR/USD is recovering and is trading at the 1.0530 zone, at the highest since the Asian session. The dollar lost ground due to a significant drop in Treasury bond yields due to a fall in the markets and pending Powell’s words.
EUR/USD previously bottomed at 1.0467. The rebound of more than 50 pips was mainly due to the weakness of the dollar. DXY is negative below 104.40, having approached 105.00 hours ago.
Looking at Powell and the markets
Stocks are falling around the world, erasing some of Tuesday’s gains. The negative climate arises as a response to fears of a global recession. This strengthened the dollar initially, but then the greenback lost steam.
The treasury bond yields are falling significantly in the face of increased demand for safe-haven assets. The 10-year tranche is at 3.16%, and the 30-year tranche at 3.24%, both at daily lows. Traders are awaiting Powell’s presentation to a US Congressional committee.
short-term outlook
EUR/USD has been moving sideways for days with resistance below 1.0600 and support above 1.0450. If confirmed above 1.0600, the euro would be positioned for a bullish extension. Whereas if it eased below 1.0450, it would target 1.0420. In this last scenario, the very short-term bias would become bearish.
Technical levels
Source: Fx Street
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