EURUSD continues to gain and has already climbed over 3.5% off the local low reached on December 8, 2023. The main currency pair broke above the 1.1100 mark today and reached the highest level since late-July 2023. The move is driven primarily by US dollar weakness, although recent EUR strengthening also played a role. US yields have dropped significantly over the past two months, with 10-year Treasury yield dropping from around 5.00% in the second half of October to around 3.80% now. Pullback in US yields is, of course, driven by expectations that Fed will begin to ease its monetary policy next year.
Taking a look at EURUSD chart at D1 interval, we can see that a break above the 1.1100 resistance zone opened a way towards this year's highs in the 1.1250 area. There are no major resistance level left ahead of the 1.1250 area, therefore bulls may attempt to test it soon, unless a major surprise in central banks' narrative occurs. However, steepness of a recent upward move on the TNOTE market (light blue overlay) suggests that investors are convinced when it comes to the direction, at least for the US dollar. EURUSD may see some elevated volatility this afternoon when US jobless claims and pending home sales data is released at 1:30 pm GMT and 3:00 pm GMT, respectively.
Source: xStation5
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