EUR/USD looks to 1.2200 amid weaker US Treasury yields, risk-on mood

The EUR/USD pair locks in some gains in the Asian session on the last trading day of the week. The pair opened flat, although quickly gathers the momentum of around  20-pips movements.

At the time of writing, EUR/USD trades at 1.2191, up 0.18% for the day.

The US 10-year benchmark yields retreat to a 3-month low of 1.43% from the previous day’s close at 1.45%. The US Dollar Index (DXY) follows the yields and breaks below the 90.00 mark to trade on Friday. As of writing the DXY was last seen trading at 89.72, down 0.12%.

The move is the reaction to waning inflation anxiety among investors. The US annual inflation rate came at 5%, above the Fed expectations. However, it failed to trigger any significant market reaction as it seems the news is being already discounted.

Meanwhile, a Reuters poll of economists showed that the Fed is likely to announce QE tapering measures in August or September on rising pricing pressures. 

On the other hand, the euro moved a little higher after the ECB left its cash rates unchanged, despite the higher economic projections. The ECB President Christine Lagarde reaffirmed that the central bank is committed to its bond purchasing program even at a higher rate than the previous one. The central bank for the first time since 2018, confirmed that the Eurozone economy is no longer overshadowed by risk to its growth outlook. 

On the economic docket, traders would have the opportunity to trace German Wholesale Price, US Michigan Inflation and Consumer Sentiment to take some fresh trading impetus.

As for now, the dynamics around the US dollar continue to influence the pair’s performance.

EUR/USD additional levels