EURUSD dipped to 1.0570 for the first time since March before bouncing marginally
The euro fell to fresh multi-month lows as the US dollar extended its ascent across the board, holding above the 106.00 zone as buying interest persists around fresh November highs registered around 106.20 earlier in the session.
Now, the buck seems to have enough upside momentum to challenge fresh multi-month tops in the near term, especially as the DXY keeps trading above the 106.00 figure that represents the immediate support at this stage. The greenback keeps deriving support from a hawkish Fed meeting outcome that added to the dollar’s appeal.
Against this backdrop, EURUSD retains a bearish bias on Tuesday, staying below the key SMAs that turned back into resistance levels after an earlier sell-off. Earlier in the day, the pair dipped to 1.0570 for the first time since March before bouncing marginally amid oversold conditions.
The shared currency remains depressed as risk demand remains subdued while the greenback keeps rallying along with Treasury yields. The pair has been losing ground for the eleventh week in a row, with bearish momentum intensifying this month.
It looks like the euro could stay under pressure in the short to medium term as the Federal Reserve plans to keep higher rates for longer than anticipated, thus supporting dollar’s strength, also fueled by a resilient US economy. In contrast, the ECB is aimed towards a prolonged inaction in its hiking cycle even as inflations stays well above the central bank’s target.
In other words, monetary policy divergence continues to play into dollar’s hands, making it difficult for the euro to attract demand. Should the EURUSD pair fail to regain the 1.0600 figure in the near term, a decisive break below the 1.0570 support zone would open the way towards the 1.0500 mark last seen in January.