The EUR/USD pair gained bullish momentum on Tuesday and pushed to fresh six-day highs, propelled by improving sentiment in financial markets.
The U.S. dollar weakened across the board as stocks advanced in Europe and Wall Street, helping EUR/USD to extend its bounce from a five-year low of 1.0348 struck on Friday to a high of 1.0555 on Tuesday.
The pair was advancing for the third day in a row, a milestone it hadn’t accomplished since mid-March.
Further support came after another revision of the European Union Q1 Gross Domestic Product and hawkish comments from ECB member Klaas Knot. The Q1 GDP posted a 0.3% growth from the previous quarter and 5.1% from a year earlier.
Additionally, ECB’s Knot said a 50 bps hike in July shouldn’t be ruled out if inflation broadens and accumulates.
Meanwhile, Fed Chairman Jerome Powell said in an event on Tuesday that the Fed is comfortable with 50 bps rate hikes but that the FOMC could speed up or slow down if economic conditions change.
From a technical standpoint, the EUR/USD pair holds the short-term negative bias according to the daily chart, although the pair could extend the upward corrective movement in the upcoming sessions.
Above the 1.0550 area, immediate resistances are seen at 1.0580, 20-day SMA, and the May 5 high at 1.0640. A break above this latter could put the 1.0750 zone on the radar.
Still, the EUR/USD is expected to remain vulnerable below a descending trendline drawn from February highs, currently at 1.0890.
On the other hand, the loss of the 1.0470 area could revive the bearish momentum and quickly send the pair to the 1.0348 low. A break below the 1.0348-1.0340 zone would expose the 1.0300 psychological level.
