EUR/USD bulls holding in the 1.09s front side of bullish trend

EUR/USD is down some 0.16% after falling from a high of 1.0984 and reaching as low as 1.0917 as the US Dollar strengthened on Wednesday, lifted by rising Treasury yields.

Meanwhile, the US Dollar index, DXY, which tracks the currency against a basket of its peers, was up 0.24% but at 101.96 currently, it is off the highs of the day that were printed at 102.228. DXY rallied from a low of 101.656 with investors dialing down on the consensus that the Federal Reserve will cut rates later this year. Consequently, the yield on two-year Treasury notes, which are sensitive to expectations for the US central bank's monetary policy was hitting a one-month high of 4.286% on Wednesday. 

Going forward, the Federal Open Market Committee will enter a blackout this weekend ahead of the 2/3 May meeting. The latest guidance is very much in line with market pricing and Atlanta Fed President Bostic said that he favors one more 25bp rate hike and then a pause. Bostic explained that tightening credit conditions could do some of the Fed’s work. ´´The Atlanta Fed has historically been seen, rightly or wrongly, as a barometer of consensus on the FOMC,´´ analysts at ANZ Bank said.

´´ The Atlanta Fed’s GDPNow indicator was little changed following the data at 2.5% saar for the first quarter. The advance estimate of Q1 GDP will be released next week. The early median estimate is for a 0.5% QoQ gain, 2.0% saar,´´ the analysts added.

EUR/USD technical analysis

EUR/USD has found its footing in the daily trendline support and there is a focus on an upside continuation through 1.0990 and beyond 1.1032. However, a break below 1.0910 will open risk to 1.0830 structure.