EURUSD climbs back above 1.0300

• Dollar rally loses momentum even as US yields rebound.
• EURUSD is stabilizing around 1.0300 and holding firm on its recent gains.
• More US inflation data will be released on Tuesday.

The EURUSD pair erased intraday losses after rallying back to the 1.0330 zone. Earlier, the pair bottomed at 1.0270, but then the dollar lost momentum across the board, triggering the bounce.

EURUSD maintains its recent gains

After an impressive two-day rally, EURUSD stabilized around 1.0300. So far the correction has been limited and the bias remains to the upside, despite overbought readings. As long as it is below 1.0350/60, the gains are limited.

The dollar fell during the American session, even as US yields rose. The 10-year US Treasury yield stands at 3.89% and the 2-year Treasury yield stands at 4.43%. Wall Street stock prices move away from highs.

EURUSD holds most of the recent gains that followed the release of the October US Consumer Price Index, which boosted expectations of a less hawkish Federal Reserve. The Production Price Index will be published on Tuesday, which could affect the markets. More signs of slowing inflation could further weigh on the dollar, while the opposite could trigger a sharp dollar correction.

“The market is leaning towards this week’s scheduled Fed comment series with the risk that the collective tone remains hawkish.” Over the weekend, the Fed’s Waller suggested that “the market seems to be well ahead of this CPI report.” Strong resistance awaits in the EUR/USD1.03.50/70 zone. We see the risk of parity being reached again before this zone is breached,” Rabobank analysts explain.

In the Eurozone, the data published on Monday showed a higher-than-expected increase in Industrial Production. Data on employment, GDP and confidence for the third quarter will be released on Tuesday.

Technical levels