The EUR/USD pair is rising on Wednesday and is back above 1.1000, after erasing Tuesday’s losses. The pair fell from 1.1066 to 1.0963 on Tuesday, only to climb back to the 1.1060 area on Wednesday. The events ahead could add fuel to recent volatility. Overall, it continues to move sideways, within an uptrend, holding above key technical levels and supported by a stronger euro across the board.
Expectations that the European Central Bank (ECB) will continue raising interest rates are supporting the euro. Even this week, as Eurozone bond yields drop sharply amid a deterioration in market sentiment, the euro is holding well.
Incoming inflation and growth data from the Euro area will be watched closely. Also important will be growth figures from the US on Thursday. However, market participants have already decided what will happen next week: they see rate hikes from the Fed and the ECB.
Renewed banking concerns after the results of First Republic Bank (NYSE:FRC) and a gloomy global growth outlook weighed on sentiment. European markets are falling on Wednesday, and Wall Street futures are mixed. The VIX is up for the second day in a row. The rally in global bonds continues. The German 10-year yield fell to 2.30%, the lowest in two weeks. The 10-year Treasury yield dropped to 3.39%, also at two-week lows.
From a technical perspective, EUR/USD held above a key short-term uptrend line, currently at 1.0940 and also above the 20-day Simple Moving Average. Risks remain tilted to the upside. However, the pair must hold above 1.1000 and print fresh cycle highs soon, to avoid a deep correction.
More gains will target the April monthly high of 1.1075. Above the next resistance is the psychological 1.1100, followed by 1.1120. On the flip side, a daily close below 1.0930 would weaken the outlook, while a break of 1.0900 could point to a double top, suggesting a more pronounced slide ahead.
