EUR/USD resumed the upside during the American session as the spread between US and European bond yields narrowed further and amid a decline in equity prices in Wall Street. The pair reached a new 1-year high at 1.1444 and remains near the top, holding a strong bullish tone.
USD remains weak
After a brief pause, the greenback turned again to the downside. The latest slide also included the yen amid a reversal in Wall Street. The US Dollar Index fell to 95.25, hitting the lowest in almost nine months. The Dow Jones opened in positive territory and now is down 0.84%. The VIX index, a gauge of volatility jumped today almost 40%.
Regarding data, tomorrow will be a busy day. Inflation data from the Eurozone and employment numbers from Germany will be released. In the US, the Personal Income and spending data, the Chicago PMI and Consumer sentiment report are due. Today the third reading of US Q1 GDP showed a positive revision from 1.2% to 1.4%.
On the central bank talk show, today was the turn of James Bullard, from the Federal Reserve (not an FOMC voter currently). He said that the current level of Fed rates is appropriate and signaled that the recent inflation data surprised to the downside.
Fed's Bullard: Current level of the policy rate is appropriate
EUR/USD technical outlook
The pair is moving with a clear bullish bias and the momentum favors the euro. Technical indicators show overbought readings but no strong signals of a correction. Current moves are in line with the dominant trend.
If the EUR/USD continues to rise it will reach the 1.15 handle. Above at 1.1530 could face a strong barrier. If it climbs further the 2016 high (1.1615) will be on the radar.
To the downside, a decline under 1.1400 (psychological / 20-hour moving average) could favor some stabilization or a modest correction. The upward trend is likely to remain with momentum as long as price holds above 1.1280.