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EUR/USD – The dollar at a three-month high – Analysis for April 24th 2018


The U.S. dollar significantly gained amid a surge in Treasury yields that reached the highest level in four years. The greenback was further supported by a good PMI reading and home sales numbers. Support is set at 1.125, resistance at 1.225.

Commentary:

The dollar has reached the highest levels in three months this morning. The dollar index, measuring its strength against six major currencies has reached 91.054, the highest level since January 12. The greenback gained due to a record surge in Treasury yields. The biggest gains were seen for the 10-year Treasuries with the yield climbing to 2.998 percent. This means nearly 16 base points climb during the last four trading sessions. The dollar got further support from good PMI readings and home sales that grew by 1.1 percent, although a reading of 0.2 percent was expected.

PMI data was also released in the euro zone and came just above the expectations. The only number that failed to reach the market consensus was the manufacturing index, coming at 56.0 against the expected 56.1. The dollar rally was too strong and the numbers were unable to drive the euro any higher. Today the common currency may be driven by the release of IFO business climate data. Further drop is expected and this may push the euro even lower.

Today’s releases:

  • 10:00 Euro zone – IFO business climate
  • 16:00 USA – New home sales
  • 16:00 USA – Consumer confidence index

Analysis:

Pic.1. EUR/USD chart.

The EUR/USD pair has seen further drop amid the strengthening of the greenback. There’s nothing on the agenda today that could bring some support for the currency, as the markets are expecting the bussiness climate reading to weaken. Additionally, if the U.S. readings come out strong, the dollar could further gain and the pair could try to move towards the 1.125 level.

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