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EUR/USD erases early gains as dollar sell-off stalls
- EUR/USD is sidelined near 1.1935 ahead of the London open.
- The dollar sell-off has paused despite strong risk sentiment.
- Mention of yield curve control in Fed minutes would be dollar bearish.
EUR/USD faced rejection above 1.1950 during Tuesday's Asian trading hours, as the dollar sell-off suddenly stalled despite the risk-on rally in the Asian stocks. The pair is now trading largely unchanged on the day near 1.1935.
Bear breather for the dollar?
The dollar index, which tracks the value of the greenback against majors, has recovered slightly from the 28-month low of 92.13.
The selling pressure around the safe haven American currency has weakened despite the risk-on action in the Asian stocks. Major Asian markets climbed to a seven-month peak on Wednesday, tracking the S&P 500, which registered a record high close on Tuesday.
Also, the dollar's bounce lacks the support of treasury yields, which remain under pressure. As such, one may conclude that the minor recovery is the result of bears taking a breather ahead of the release of the minutes from the June 28-29 Federal Reserve meeting.
The focus will be on policymakers' forward view on employment, growth, and inflation. Commentary on yield curve control may trigger another round of broad-based USD sell-off. That's because speculation has been doing rounds for quite some time that the Fed would implement an RBA-style yield curve control.
Meanwhile, during the European session, the pair may take cues from newsflow from the Eurozone EcoFin meeting, Eurozone's Current Account data, and Consumer Price Index.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
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