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EUR/USD Surges Towards 1.0800 as Weak U.S. Dollar Spurs Rally

ByAlex Boltyan
Published 06/08/2023, 04:54 PM
Updated 07/09/2023, 06:32 AM

The EUR/USD pair posted solid gains on Thursday as the US Dollar Index weakened across the board following softer-than-expected US jobs data.

At the time of writing, the EUR/USD pair is trading at the 1.0780 area, marking a 0.78% daily increase and its second consecutive advance.

The US dollar faces pressure as speculations grow that the Federal Reserve will halt its tightening cycle during the upcoming FOMC meeting on June 13-14. Dovish sentiments were fueled by higher-than-expected initial jobless claims for the week ending on June 2. According to the CME FedWatch Tool, the probability that the central bank will maintain the fed funds range at 5.00%-5.25% after ten successive rate hikes is now around 72.5%.

The dollar retreated alongside declining US yields, with the 10-year note rate dropping nearly nine basis points to 3.718%.

Across the pond, despite the Eurozone's first-quarter Gross Domestic Product (GDP) growth of 1% year-over-year falling short of expectations at 1.2%, the euro managed to sustain its gains against the dollar.
EUR/USD Daily Chart
From a technical perspective, the EUR/USD pair short-term outlook has improved over the last sessions according to indicators on the daily chart, although the bias remains skewed to the downside. Nonetheless, the price has risen above the 20-day simple moving average (SMA) and approaches the next resistance level near the 100-day SMA at 1.0807. Reclaiming the critical level of 1.0900 would be a positive sign.

On the downside, support levels can be found at weekly lows around 1.0670, followed by the May monthly low of 1.0635 and the psychological level of 1.0600.

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