- EUR/USD finds resistance again at 1.1720 and reverses.
- US dollar mixed across the board as trade war escalates and amid higher US yields.
The EUR/USD pair peaked after the beginning of the US session at 1.1723, reaching the highest level in three weeks but then pulled back. It dropped to 1.1681, moving closer to daily lows. As of writing, it was trading at 1.1685, unchanged for the day. The short-term bias was still pointing higher but the euro was unable again to break the 1.1720/25 area.
Price action remains limited on Tuesday with majors moving in small ranges for the day, excluding USD/JPY that is rising sharply above 112.00. The move higher in the mentioned pair is being driven by higher equity prices and US yields. The Dow Jones is up 0.49% and it has erased all the losses that followed Trump’s announcement of more tariffs to Chinese goods.
The US Dollar Index bottomed earlier today at 94.35, the weakest since July 31 and rebounded, erasing daily losses. It is trading back above 94.50. Higher US yields are supporting the greenback. The 10-year yield climbed to 3.03%, the highest level since May. At the recent auction, the Treasury sold 1-month bills at an interest rate above 2% for the first time since 2008.
Levels to watch
EUR/USD still holds a bullish tone in the short-term but the momentum is easing. The pair needs to break above the 1.1720/25 area in order to clear the way for a test of the key resistance area at 1.1745/50. A close above 1.1750 would signal more gains ahead. On the flip side, immediate support might be seen at 1.1680 (US session low) followed by 1.1665 (daily low), 1.1645 and 1.1620/30 (short-term uptrend line).
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