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Oct 18 - 11:55 AM

EUR/USD - COMMENT-Signs From US Rates Markets May Help Extend EUR/USD Rally

By Christopher Romano  —  Oct 18 - 10:10 AM

EUR/USD rose on Tuesday to an 8-session high as improving risk sentiment led investors to shun the safe-haven dollar and yen, while U.S. interest rate markets signaled the potential for the euro to extend its rally.

Treasury 2-year yields have pulled back from 15-year highs hit on Oct.
Daily RSI diverged on that peak and turned down from overbought Tuesday.

March 2023 Eurodollar prices EDH3 fell to a 9-year low Monday but then turned positive.
Daily RSI did not confirm the new low and diverged and is about to climb out of oversold territory.

These technical signals suggest rates could head lower, which would weigh down the dollar and lift EUR/USD.

Significant rallies in equities ESv1 and EUR/JPY have reinforced risk-on sentiment, which should underpin EUR/USD.

EUR/USD technicals have also leaned more bullish.
The pair is trading above the 10- and 21-day moving averages while daily and monthly RSIs imply upside momentum is building.

A test of the 55-DMA and parity seems likely.
A break and sustained hold above the latter could see bulls target the 1.0200 area and big resistance near 1.0350/70.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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