- The US Dollar remains strong as market sentiment deteriorates.
- Key data from the US on Thursday includes Philly Fed and Jobless Claims, with Chairman Powell scheduled to speak.
- The EUR/USD pair reversed near 1.0600, falling toward a short-term uptrend line.
The EUR/USD dropped below the 20-day Simple Moving Average (SMA) on Wednesday after facing resistance again at 1.0600. The slide occurred as the US Dollar strengthened across the board, supported by deteriorating market sentiment and higher Treasury yields.
Chinese growth data exceeded expectations and initially boosted market sentiment. However, the positive tone did not last as geopolitical concerns took centre stage, weighing on risk sentiment and offering an impulse to the US Dollar.
Simultaneously, higher Treasury yields provided additional impetus to the Greenback. The 10-year Treasury yield climbed to 4.92%, reaching its highest since 2007.
On Thursday, US Jobless Claims data and the Philly Fed index are scheduled to be released. Additionally, Federal Reserve (Fed) Chair Powell is scheduled to speak at the Economics Club of New York.
The EUR/USD continues to consolidate within a bearish dominant trend. Fundamentals continue to favor the US Dollar, limiting the upside potential and maintaining a risk tilt to the downside for the pair.
EUR/USD short-term technical outlook
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The EUR/USD climbed to 1.0595 and then retraced, forming a double-top pattern in the short term. The bearish move below 1.0560 confirmed the pattern, and the target was reached at 1.0530. This pattern suggests that the pair may have peaked in the short term. If the pair breaks below 1.0520, it could expose the Euro to further weakness, with the next significant support at 1.0500.
On the upside, the pair would need to reclaim 1.0565 to indicate another test of the critical resistance at 1.0595. Breaking above this level would clear the way to more gains, targeting 1.0630.
