EUR/USD rebounds from two-day lows toward 1.1130

• Euro among worst performers on Thursday.
• DXY rises after two days of declines, off highs.
• EUR/USD’s recovery finds resistance below 1.1135.

The EUR/USD bottomed at 1.1067 after the beginning of the American session and then rebounded to the 1.1135 area as stocks trimmed losses in Wall Street. The greenback lost momentum as US yields remain near daily lows.

The euro is the worst G10 performer on Thursday, hit by a decline in German yields and concerns about rising inflation in the Eurozone. The CPI is due on Friday, and it could reach 7%.

In the US, data showed the Core PCE rose to 5.4% (year-over-year), Initial Jobless Claims rose modestly to 202K from the lowest since 1969, and the Chicago PMI rose from 56.3 to 62.9. The figures were mostly ignored by market participants. On Friday, the US official employment report is due. Marker consensus points to an increase in payroll of 490K and a drop in the unemployment rate from 3.8% to 3.7%.

US yields look steady on Thursday, hovering near recent lows. The 10-year yield stands at 2.32% and the 30-year at 2.45%. The Dow Jones drops 0.36%, and the Nasdaq loses 0.27%.

Testing the 20-SMA in 4-hour chart

The correction of EUR/USD from the highest level in four weeks near 1.1200, alleviated the bullish pressure, but so far, it did not change the current positive outlook for the euro. The pair rebounded and managed to remain above the 20-Simple Moving Average in four hours chart (currently at 1.1080) and recovered 1.1100.

A firm break under 1.1080 would change the current bias to neutral. The immediate, relevant support might be seen at 1.1035/40.  On the upside, the 1.1135 zone has become a critical resistance again. If the euro rises above a test of the weekly high at 1.1185 should not be ruled out.

Technical levels