EUR/USD fell on Wednesday as safe-haven demand for dollars and yen sent it to probe resistance-turned-support near 1.0640/55, but shorts shouldn't rest easy in the face of upside risks that could still drive the euro to 1.0950/1.1000.
Downbeat U.S. durable goods data nL2N2XH11V aggravated investor concerns about slowing economic growth, sending U.S. rates lower.
June 2023 Eurodollar EDM3 prices rallied toward key resistance as investors reduced terminal Fed rate expectations while 10-year Treasury yields struck a 28-session low.
2-year yield spreads US2DE2=R, which EUR/USD is typically positively correlated with, tightened further, reducing the dollar's yield advantage.
Hawkish ECB rhetoric nL2N2XH0RB should also help underpin the euro.
Technical signals continue to highlight upside risks.
The topside test of old resistance-turned-support and subsequent bounce is a sign that dip buyers are lurking.
Monthly RSI and a bull hammer candle reinforce bullish signals.
EUR/USD may be entering a consolidation phase, which is a healthy development for trends.
If the consolidation phase ends with a break of 1.0755/80 resistance -- comprised of the April 14 low, 50% Fib of 1.1185-1.0349 and 55-DMA -- 1.0950/1.1000 will come into focus.
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