Euro’s Strength Attributed to USD’s Selling Bias
Investors have been bidding on EUR/USD during the early European trading session. The pair has consequently climbed to the highest level since January. It was last seen hovering around the 1.2260-65 area.
Tuesday marks the second day of the EUR/USD’s winning streak. The pair has capitalized on yesterday’s strength and has managed to carry its gains over to Tuesday. The euro’s major source of strength is the USD’s continuing weakness and its selling bias. Investors seem to have accepted the Federal Reserve’s opinion that inflation would be transitory and have abandoned expectations of a rate increase. Their agreement with the Federal Reserve officials checked in the greenback’s advance.
The USD Index, measuring the USD’s performance against a basket of six major currencies, slid to new multi-month lows. After having touched the mid-89.00s level, the dollar was further pressured by the falling Treasury bond yields. Markets’ general bullish tone also negatively affected the US dollar, traditionally looked at as a haven in hard times.
Analysts explain the latest leg of a sudden spike in the early morning on Tuesday as a technical buying on a move beyond the 1.2235-40 resistance area. The price spike, they think, might have already prepared the ground for a further short-term rising move. It may well be that the EUR/USD will go on to revisit the 1.2300 level, on the way to YTD peaks around mid-1.2300s.
EUR/USD traded at 1.2215 in the early hours of the European session. The pair was last seen trading at 1.2261. Its price change constitutes 0.38% so far.
