After a bearish start to the week, the US dollar regained strength amid a risk-off tone that dominates global financial markets on Tuesday. The USD index is back above the 102.00 figure as the North American session begins. Earlier in the week, the greenback derived support from the 101.30 zone that capped the downside momentum during the recent sell-off.
Against this backdrop, EUR/USD plunged back under the 1.0700 mark as a result of a strong rejection from a monthly high of 1.0786. Interestingly, the common currency shrugged off hawkish comments from ECB Governing Council member Peter Kazimir who said that he expects a 25 bps rate hike in July and is open to discussing a 50 bps move amid record-high Eurozone inflation.
By the way, fresh data showed earlier today that the Eurozone HICP soared by 8.1% in May, exceeding a forecast of 7.7%. In part, potential euro buyers were deterred by a warning from Kazimir that a short recession in some Eurozone countries is possible this year.
Still, even as the dollar managed to regain some of its recent losses after three daily drops in a row, a deeper retreat can't be ruled out at this stage. In other words, the short-term technical outlook for the USD index still looks bearish.
Should the selling pressure reemerge, the price may derail the 101.30 mentioned support and target the 101.00 figure. In the longer run, however, the outlook for the buck is seen as constructive while above 97.60. On the upside, the immediate resistance arrives at 102.45.