EUR/USD Back Below 1.0500, Posts Third Consecutive Weekly Fall
The EUR/USD pair snapped a three-day gain streak as U.S. Treasury yields lifted the dollar on Friday. At time of writing, the pair trades at 1.0483, 0.66% below its opening price, erasing most of Thursday's gains that saw the pair hit a weekly high of 1.0601. Furthermore, the EUR/USD is on track to close its third consecutive week with losses.
The yield on the U.S. 10-year note has stabilized around 3.25% after hitting a cycle high at 3.497% on Tuesday. Meanwhile, the yield on the 10-year German Bunds has also steadied reaching its highest level since 2014 at 1.926% on Thursday.
On the other hand, after deciding to hike rates by 75 bps on Wednesday, Federal Reserve Chair Jerome Powell stressed that Fed’s main objective is to return inflation to 2% and that they will take the necessary measures to stabilize prices. For next week, investors will closely follow his testimony before the Senate, where he could give more information about his vision of the macroeconomic environment and the next monetary policy steps.
The technical outlook for the EUR/USD remains clearly bearish according to weekly chart, with the pair posting its third weekly loss in a row. On the daily chart, the pair holds a neutral bias, slightly skewed to the downside.
The daily RSI has gained a significant downward slope, while the MACD histogram suggests that the selling momentum is picking up steam.
To the downside, first support is seen at the 1.0400 psychological level, loss of which would expose the May 13 cycle low of 1.0349. The next support below these two levels is seen at 1.0300.
On the other hand, the first significant short-term resistance level is located in the 1.0640 area, where the 20-day moving average stands. Beyond that, the EUR/USD could face resistance at the 1.0700 psychological level, which is reinforced by a downtrend line coming from the February highs, and the 1.0770 zone.
The yield on the U.S. 10-year note has stabilized around 3.25% after hitting a cycle high at 3.497% on Tuesday. Meanwhile, the yield on the 10-year German Bunds has also steadied reaching its highest level since 2014 at 1.926% on Thursday.
On the other hand, after deciding to hike rates by 75 bps on Wednesday, Federal Reserve Chair Jerome Powell stressed that Fed’s main objective is to return inflation to 2% and that they will take the necessary measures to stabilize prices. For next week, investors will closely follow his testimony before the Senate, where he could give more information about his vision of the macroeconomic environment and the next monetary policy steps.
The technical outlook for the EUR/USD remains clearly bearish according to weekly chart, with the pair posting its third weekly loss in a row. On the daily chart, the pair holds a neutral bias, slightly skewed to the downside.
The daily RSI has gained a significant downward slope, while the MACD histogram suggests that the selling momentum is picking up steam.
To the downside, first support is seen at the 1.0400 psychological level, loss of which would expose the May 13 cycle low of 1.0349. The next support below these two levels is seen at 1.0300.
On the other hand, the first significant short-term resistance level is located in the 1.0640 area, where the 20-day moving average stands. Beyond that, the EUR/USD could face resistance at the 1.0700 psychological level, which is reinforced by a downtrend line coming from the February highs, and the 1.0770 zone.