- US dollar extends gains on Friday as Wall Street falls.
- US yields remain relatively stable in the recent range, near multi-year highs.
- EUR/USD is headed for the lowest weekly close since March 2020.
The EUR/USD fell further on Friday thanks to a stronger US dollar and posted a fresh four-day low at 1.0769. Remains near the lows, under pressure and eyeing the 1.0760 support area.
Does the dollar soar, Lagarde turns aggressive?
The US dollar posted new highs across the board late on Friday as US stocks increased their losses. DXY gains 0.63% and trades at 101.25, the highest level since 2020. At the same time, US yields remain around the recent range, at multi-year highs. Expectations of more aggressive Fed tightening continue to support the dollar, particularly after Fed Chairman Jerome Powell’s comments on Thursday.
European Central Bank President Christine Lagarde said on Friday that the central bank’s purchasing program could end at the beginning of the third quarter and added that interest rates could rise in 2022. Her words sounded more aggressive compared to the speech on Thursday, but they did not help the euro.
Testing a key area
EUR/USD’s decline pushed it into a critical support area seen around 1.0760, slightly above the multi-year low hit on April 14. The Euro needs to stay above to avoid a deterioration in the already negative technical outlook.
“A drop below the 1.0760 price zone should open the door for a test of 1.0635, the low recorded in March 2020. Further falls below the latter expose the 1.0520 region on track for the multi-year low on record in January 2017 at 1.0339. On the other hand, the pair needs to break above 1.0920 to have chances of further rallies, targeting first 1.1010 and then the 1.1100 area,” explained Valeria Bednarik, Chief Analyst at FXStreet.
Technical levels
Source: Fx Street
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