EUR/USD traded higher Tuesday and rallied above the 10-day moving average with help from improved risk sentiment, but longs should be more encouraged by the pair's resiliency despite hawkish Fed rhetoric.

In a Reuters exclusive St.
Louis Fed President James Bullard struck a hawkish tone, saying not much progress has been made on inflation, recession predictions are ignoring strong labor markets and he sees a restrictive policy rate between 5.50% and 5.75%.

Bullard's' comments reinforced hawkish rhetoric delivered by the Fed Governor Christopher Waller last Friday.

U.S.
yields US2YT=RR didn't gain on Bullard's comments however.
German-U.S.
2-year spreads US2DE2=RR, which EUR/USD is correlated with, tightened slightly to erode some of the dollar's yield advantage over the euro.
The tightening trend remains intact, which should underpin EUR/USD.

EUR/USD price action should be encouraging for longs.
Some overnight gains were erased but the up trend off the March 15 daily low remains in place.

The up trend as well as rising daily and monthly RSIs give technicals a bullish lean.

Unless U.S. rates rise sharply and drive the dollar higher EUR/USD should eventually break 1.1075/1.1100 resistance.

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