EUR/USD drops toward 1.1340 and rebounds as USD moves with Fed talk
|- US Dollar rose but then trimmed gains as comments from Powell and Bullard trigger volatility.
- EUR/USD tumbles to 1.1342 and then rebounds back to 1.1380.
The EUR/USD pair fell to 1.1342, hitting a fresh daily low and then bounced back to the 1.1380 area. The decline took place amid a rally of the US Dollar across the board, but the greenback failed to hold to most of the gains and retreated from the session top.
The move was triggered by comments from St. Louis Fed President Bullard who hinted at a 25 basis points rate cut and not a 50 bp. Minutes later, Chair Powell said it is important not to overreact in the short-term and added that the key question is whether uncertainties continue to weigh on the US economic outlook.
Volatility rose with those comments and initially strengthened the US Dollar but then lost momentum and pulled back modestly. Still, the greenback is about to post the first gain in days. The DXY stands at 96.10, up 0.15% for the day. Wall Street extended losses over the last hour and the DOW JONES is falling 0.45% and the S&P500 0.60%. US yields moved momentarily to the upside. The 10-year is back under 2% after making a spike to 2.01%.
EUR/USD Outlook and levels
From a technical perspective, the correction of the US Dollar offers no significant challenge to the bullish bias of the pair so far. The EUR/USD pair is back above the 20 SMA in the four hours chart, and it also held above the 1.1340 support area. If the pair drops below, the correction could likely strengthen. On the upside, the key level to watch continues to be 1.1400. Today it traded on top several times but failed to hold. A daily close clearly con top would point to further gains.
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