EUR/USD rose on Tuesday, hitting a 4-month high after completing a consolidation phase with its break of 1.2145/50 resistance, and further gains are likely due to influences from the Fed's inflation rhetoric and technicals.
On Monday Fed Governor Brainard said she expects pricing pressures to subside over time nN9N2JM00C and Chicago Fed President Evans said on Tuesday he sees a low risk of high, persistent inflation in 2022 and beyond nL2N2NB2JR.
Investors appear to be convinced.
U.S. 10-year yields US10YT=RR extended their fall from the May 13 peak to an 11-session low while December 2022 eurodollars EDZ2 rallied to a 10-session high after breaking above structural resistance on Monday.
The U.S. rate slide is driving broad dollar weakness, underpinning EUR/USD.
EUR/USD technicals highlight upside risks.
In addition to ending its recent consolidation phase EUR/USD is trading above the bullishly aligned 10- and 21-DMAs and within a bull trend channel.
Daily and monthly RSIs are rising but not overbought, indicating upside momentum.
Upbeat German Ifo data nL5N2NC1RS makes the euro attractive due to expected economic growth.
EUR/USD could test January's monthly high, making a run to 2018's yearly high possible.
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