EURUSD climbs back above 1.0300 as Dollar recovery fades

• Dollar’s recovery loses momentum, even as US yields rebound.
• EURUSD stabilizes around 1.0300, holds firm onto recent gains.
• More US inflation data due on Tuesday.

The EURUSD pair erased intraday losses after climbing back to the 1.0330 zone. Earlier the pair bottomed at 1.0270 but then the Greenback lost momentum across the board, triggering the rebound.

EURUSD holds onto recent gains

After an impressive two-day rally, EURUSD stabilized around 1.0300. So far the correction has been limited and the bias continues to point to the upside, despite overbought readings. While under 1.0350/60, gains seem limited.

The Dollar pulled back during the American session even as US yields moved higher. The US 10-year stands at 3.89% and the 2-year at 4.43%. Equity prices in Wall Street are moving off highs.

EURUSD holds onto most of recent gains that followed the release of the October US Consumer Price Index that boosted expectations of a less aggressive Federal Reserve. On Tuesday, the Producer Price Index is due and could impact markets. More signs of a slowdown in inflation could weigh further on the dollar, while the contrary could prompt a steep correction of the dollar.

“The market is now leaning into this week’s slew of scheduled Fed commentary with the risk that the collective tone will remain hawkish.  Over the weekend, the Fed’s Waller suggested that “the market seems to have gotten way out in front over this one CPI report”.  Strong resistance awaits in the EUR/USD1.03.50/70 area.  We see risk that parity will be hit again before this area is breached”, explained analysts at Rabobank.

In the Eurozone, data released on Monday showed a bigger than expected increase in Industrial Production. On Tuesday, data to be released includes Q3 employment, GDP and confidence.

Technical levels