- Euro gains versus US dollar for the second day in a row versus US Dollar.
- US Dollar Index tumbles to lowest in two years, as greenback remains under pressure versus G10 currencies.
The EUR/USD pair gained momentum and printed a fresh daily high at 1.1965, matching the YTD top it reached back in August 18. It is hovering around 1.1950 with the bullish tone intact but still unable to make a run above the recent top.
The euro is about to post the highest daily close versus the US dollar since May 2018. The critical support of the rally in EUR/USD continues to be the decline of the US dollar. Measured by the DXY, it dropped to the lowest in two years. The index is testing the 92.00 are.
Over the last two trading days, EUR/USD resumed the upside and turned clearly positive for the month. It will be the fourth monthly gain in a row. The trend to the upside remains intact and a test of 1.20 seems likely relatively soon.
“Whilst we expect a near term pause, from our cross asset lens we note that relative short end rate differentials, relative performance of periphery spreads vs. bunds and higher commodity prices/higher HICP inflation are likely to keep EUR outperformance intact”, explained CitiBank analysts. According to the them, EUR/USD technically has broken out a medium term downtrend and looks set to eventually test levels above 1.20.
Technical levels
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