EUR/USD bears should be more cautious after the mixed reception to U.S. Q1 GDP and core PCE data.
Headline GDP came out unexpectedly strong while core PCE, a key data point for the Fed, missed heavily to the downside.
EUR/USD spiked to a new long-term low but reversed as the PCE effects sank U.S. Treasury yields and the dollar nL1N2280BP.
spreads tightened sharply and the dollar's yield advantage eroded a bit.
EUR/USD's downside momentum has likely been sapped and could remain anemic as investors holding long dollar positions might look to exit.
Eurodollar and fed fund futures prices rallied as investors do not see the GDP number as robust as headlines suggest.
The price rally in short-term U.S. rate markets increase the odds that the Fed will cut or at least remain on hold.
The data could put the Fed on the same dovish stance as the ECB.
If both banks take the same track EUR/USD is unlikely to see sharp moves lower.
The greenback could still be more attractive to investors but some allure is gone.
Further EUR/USD falls could come at a snail's pace.
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