The EUR/USD currency pair succeeded in stopping its previous session losses and rose to 1.1330 while representing 0.30% gains on the day mainly due to the sustained decline in the US-German two-year bond yield, which underpinned the shared currency and contributed to the currency pair’s gains. On the other hand, the broad-based U.S. dollar strength triggered by the renewed fears of the second wave of the Covid-19 outbreak turned out to be one of the key factors that kept a lid on any additional gains in the pair, at least for now. At the press time, the EUR/USD currency pair is currently trading at 1.1328 and consolidating in the range between 1.1277 and 1.1330.
It should be noted that the gain in the currency pair could be short-lived as investors preferred to buy safe havens like the U.S. dollar and the Japanese yen due to the renewed concerns that the recovery could take years and economy could face bigger damage from the second wave of the coronavirus outbreak.
However, the uptick in the shared currency could be attributed to the continued decline in the US-German two-year bond yield, which had some positive impact on the shared currency. The rise in the demand for bonds urged investors to buy EUR, which ultimately underpinned the EUR currency. Whereas, the 2-year yield dropped to a 5-year low of 79 basis points yesterday, whereas it started the year at levels above 200 basis points.
Moreover, the futures tied to the S&P 500 are currently reporting a 1.2% rise. The index futures are hinting that Wall Street could extend some of the losses suffered on Thursday. The index dropped by nearly 6% on Thursday.
As a result, the broad-based U.S. dollar edged higher on the day as investors preferred to invest in safe-haven assets due to the U.S. report showing that the U.S. crossed more than 2 million COVID-19 cases as of June 12 and possibility of renewed lockdowns to curb the spread. As in result, the U.S. dollar took bids on the day. While, the dollar index, which tracks the greenback against a basket of six other currencies, was up marginally at 96.743 at 2:55 AM ET (0655 GMT).
Moving on, the EUR/USD currency pair could take further bids toward above 1.1300 only if the uptick seen in the S&P 500 futures leads to risk reset during the European trading hours. At the data front, the Eurozone Industrial Production for the month of April is scheduled to release at 09:00 GMT. As well as, the focus would be on the Michigan Consumer Sentiment Index (Jun).
Daily Support and Resistance
S1 1.1174
S2 1.1274
S3 1.1326
Pivot Point 1.1374
R1 1.1426
R2 1.1474
R3 1.1574
The direct currency EUR/USD is trading at 1.1290 mark, having penetrated the selling zone. On Friday, we can anticipate bullish revision unto 1.1309 and 1.1340 mark, which is actually 38.2% and 50% Fibonacci retracement levels. Beneath those levels, the EUR/USD pair can dispense selling sentiment as the 50 EMA can weight on EUR/USD pair for selling. Bearish crossover of 1.1275 support level can extend selling until 1.1170/ Good luck!