EUR/USD hits a session high of 1.1898
The dollar is under some modest pressure to start European trading as we see major currencies extend gains against the greenback as the market continues to digest Fed chair Powell’s speech from yesterday.
EUR/USD broke above its 200-hour MA (blue line) earlier in the day and buyers haven’t looked back since in a push towards the 1.1900 level currently.
In the aftermath of Powell’s speech yesterday, there was a bit of a whipsaw in the dollar as the market struggled for firm direction but the new day is seeing traders go with a weaker dollar for the time being.
That said, not all is clear and straightforward in the market right now. As such, I want to say that month-end rebalancing flows may also be muddying the picture right now.
European equities have mostly erased earlier gains and are now trading lower, while US futures have also trimmed gains from ~0.5% to ~0.2% now. Adding to that is Treasury yields continuing to keep higher with 10-year yields @ 0.769% currently.
The 1.1900 handle for EUR/USD will be a key spot to watch in the near-term before further swing region resistance is seen around 1.1950-66 from the highs last week.
There is good argument for the dollar to keep weaker after the change in the Fed’s strategy but one can also argue that such a change was already in place before it was officially communicated. That and the mixed picture from stocks and bonds today is making it a little tricky to read much into the dollar weakness we are seeing so far.