- EUR/USD has pierced the 200-hour moving average (HMA) resistance.
- Dovish Fed is weighing over US yields.
- US two-year yield has hit a 19-month low.
EUR/USD has cleared key resistance and may rise further in the European and US session, tracking the slide in Treasury yields, although bullish reversal may remain elusive as markets are now priced in for Fed rate cuts.
The shared currency found acceptance above the 200-hour moving average of 1.1265 a few minutes before press time and has retraced 50 percent of the drop from 1.1348 to 1.1181.
The rise could be associated with the broad-based US Dollar sell-off triggered by the US Federal Reserve's dovish forward guidance on interest rates and the resulting losses in treasury yields.
The two-year Treasury yield, which tracks short-term interest rate expectations, fell to 1.711% in Asia, the lowest level since Nov. 20, 2017. The yield may extend losses in Europe, helping EUR/USD rise further toward 1.13.
That said, the EUR bulls will likely have a tough time forcing a bull breakout above the recent high of 1.1348, as the money markets are fully priced in for a Fed rate cut in July. Further, the markets have almost priced in another rate cut before the year-end.
The fact that the two-year yield is down 23 basis points on a month-to-date basis and 90 basis points on a year-to-date basis also indicate the markets have largely priced in additional easing. As a result, the upside in EUR/USD looks limited.
The pair's break above the 200-hour MA could be short-lived if gold rally stalls and the American dollar starts recovering ground against China's Yuan.
As of writing, EUR/USD is trading at 1.1270, representing 0.40% gains on the day.
- R3 1.1326
- R2 1.129
- R1 1.1258
- PP 1.1222
- S1 1.119
- S2 1.1154
- S3 1.1122
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.