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May 27 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Pullback Likely Only A Pause In The Rally

By Christopher Romano  —  May 27 - 10:15 AM

EUR/USD rallied to a 24-session high on Friday before reversing course ahead of the 50% Fibo of 1.1185-1.0349 and 55-DMA, but the pull back will probably be a minor correction as interest rates and technicals suggest a test near 1.1000 is possible.

U.S.
April PCE, the Fed's preferred inflation indicator, suggests inflation may be peaking.
U.S. consumption surprised to the upside, but income growth is slowing and surprised to the downside nAPN0L3Q54.

U.S.
rates EDU2US10YT=RR initially gained after the data but then turned lower as investors digested the figures.

U.S.
rate moves indicate investors are reducing expectations for terminal Fed rates.
Eurodollar EDU2 prices have rallied sharply in May, outpacing gains in Euribor FEIU2, which has underpinned the euro and softened the dollar.

The dollar's yield advantage continues to deteriorate.
The spread tightening trend in German-U.S.
2-year yields is intact, which should help limit EUR/USD pull backs.

Technicals highlight upside risks.
EUR/USD's recent consolidation phase resolved with a new high, monthly RSI is rising and a monthly bull hammer candle has formed, signaling a possible rally toward 1.0950/1.1000.

For more click on FXBUZ


EURUSD Click here

edu2 Click here

feiu2 Click here

deus Click here

Source:
Refinitiv IFR Research/Market Commentary

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