After finding support at 1.0700, EUR/USD is moving up toward 1.0750 ( 4:00, 05/31/2022 ). As risk-on flows come back, the US dollar loses some of its recent gains. Before the US ISM, the safe-haven dollar may still be supported by worries about inflation and growth. This is occured as tensions in the world.
EUR/U-turn USD’s from 38.2% Fibonacci retracement (Fibo.) of February-May downside, around 1.0790 at the latest. This is helped by RSI (14) retreating to favor sellers. Bears are also encouraged by the clear breakdown of the 50-day EMA, which was near 1.0740 at the time of press.
But a support line that goes up from the middle of May to around 1.0700. This makes it hard for the EUR/USD pair to go down any further.
US Dollar Index (DXY) continues to recover from its monthly low. As of press time, it was up 0.22% during the day, near 102.00, as hawkish Fed comments and mostly positive data bring back greenback buyers.
Given the Fed’s recent “hawkish” comments, US 10-year Treasury yields have gone up two basis points to 2.864%, continuing yesterday’s recovery (bps). But the S&P 500 Futures also show small gains after bouncing back from the lowest point of the year in May.
Mixed feelings make it hard for EUR/USD traders to make decisions before Christine Lagarde, president of the European Central Bank (ECB), gives a speech that will be closely watched after the latest Eurozone inflation data. If Lagarde sticks to her “hawkish” point of view, the pair may make up for its recent losses.
Nonetheless, firmer readings of the US ISM Manufacturing PMI for May. It is expected to be 54.5, and hawkish comments from the Fed can protect US dollar buyers.
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