EUR/USD Reverses Course: Analyzing the Recent Downturn

EUR/USD experienced a sharp downturn on Thursday, closing the day deep in negative territory. Following a strong upward movement on the FOMC day, the pair took a U-turn on Thursday, reversing its trajectory and falling to around the 1.08100 area as of the time of writing.

Currently, the price has two support areas to monitor (blue rectangle), where we will observe if a potential reaction occurs or if the price continues its descent.

Looking ahead, the US economic calendar for Friday does not include any high-impact macroeconomic data releases. Federal Reserve Chairman Jerome Powell is scheduled to deliver opening remarks at the Fed Listens event titled "Transitioning to the Post-pandemic Economy" later in the day. Powell is not expected to provide any fresh comments that could significantly influence the market's pricing of the Fed rate outlook. According to the CME FedWatch Tool, markets indicate a 26% probability that the Fed will leave the policy rate unchanged in June.

Meanwhile, the benchmark 10-year US Treasury bond yield has declined nearly 1% on the day, falling below 4.25%. If US yields continue to decrease before the weekend, the USD may struggle to maintain its bullish momentum, potentially assisting EUR/USD in limiting its losses.

No action is required from our side at this moment. We will closely monitor the market for any potential reversal in the price.