EUR/USD pops higher after Fed's Beige Book

Ross J Burland FXStreet

EUR/USD is trading at 1.0717, down -0.13% on the day, having posted a daily high at 1.0737 and low at 1.0700.

EUR/USD has perked up on the bid post the release of the Fed's Beige Book for April that reports on the current US economic situation. While there was nothing poor about the report, it was not overtly bullish and that is weighing on the dollar. Manufacturing was a positive story as it continued to expand at modest to moderate pace while firms are mostly expecting mild to moderate price growth over next several months.

Fed's Beige Book: Employment increased at a modest-to-moderate pace; labor markets remained tight

Another plus was that prices rose modestly on balance since last Beige Book, although the Fed need not worry too much about inflation at this stage according to the rates market. Today, US yields are trading within a range of between 2.1735 - 2.2231% on the 10-year note and still considerably down in comparison to 2.60% in March.

EUR/USD levels

This bid is a continuation of the upside corrective rebound. To the downside, the market has a key support at 1.0675 and while the price remains above here, the market can continue to stay long of the euro while corrective pressures mount up. However, failure at nearby Fibonacci support at 1.0555, according to analysts at Commerzbank, should be enough to trigger weakness to the 1.0494 the March low then 1.0352/40 the January low. "Where are we are wrong? A close above the 200-day ma at 1.0843 would put the 1.0978/50% retracement back on the agenda."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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