EUR/USD hits fresh daily highs above 1.1360, after a quick drop to 1.1320

• EUR/USD bottoms at 1.1319 and redounds back to the 1.1355 area.
• US dollar mixed across the board, on risk aversion and higher yields.
• Wall Street extends gains, S&P 500 up by 1.50%.

The EUR/USD recovered quickly from a drop to 1.1320 and rose back to the 1.1350 area. It holds a bullish tone and is trading at daily highs at 1.1361.

EUR/USD gains on stronger euro, mixed dollar

Stocks prices are up across the globe. In Europe, main indices finished up by 1.25% on average. On Wall Street, the Dow Jones gains 1.31% and the Nasdaq 1.90%. The rally was triggered by easing tensions on Ukraine’s borders.

The improvement in risk sentiment pushed bond prices to the downside. Eurozone and Treasury yields rose significantly boosting the euro particularly. EUR/GBP is up by more than 40 pips, trading near 0.8400, while EUR/JPY rose toward 131.50.

The US dollar is falling modestly across the board, although it is up versus the yen supported by higher yields. The US 10-year yield rose from 1.97% to 2.05%. It peaked after the release of US data that showed an increase of the Producer Price Index in January above expectations. On Wednesday, the retail sales report is due.

Short-term outlook

If the EUR/USD extends the rally, the next resistance might be seen at the 1.1375 zone, followed by 1.1400 and 1.1425. The positive tone will likely remain while the pair holds above 1.1330 (20-hour moving average); a break lower should weaken the euro, exposing the 1.1320 support.

Technical levels