The EURUSD pair is to overcome the descending 20-DMA at this stage in order to see a more pronounced bounce
The euro is back under pressure on Tuesday after a short-lived bounce witnessed at the start of the week. Last week, EURUSD briefly climbed to local highs around 1.0640 before retreating as the pair lacked the momentum to see a more robust and sustainable recovery. So the shared currency remains just marginally above the lowest levels since April 2022 registered earlier in the month, as dollar bulls keep dominating the market.
The USD index has settled in positive territory on Tuesday, but the momentum looks too modest after a two-day slide. The DXY derived support from the 106.20 zone before bouncing marginally. However, the upside potential looks limited at this stage, especially as risk sentiment keeps improving in the global financial markets. Should the upcoming US economic data come in stronger than expected, the greenback may resume the ascent across the board, thus hurting the euro.
So far, however, the downside potential for the euro looks limited as risk demand continues to recover. US stocks finished higher on Monday to start the week on positive footing despite a rise in Treasury yields as Investors turned more optimistic ahead of corporate earnings. In Asia, equities also advanced today as worries about war in the Middle East have abated somehow. Meanwhile, US stock index futures were slightly lower in early premarket trade ahead of the third-quarter earnings season.
The EURUSD pair is to overcome the descending 20-DMA at this stage in order to see a more pronounced bounce from the area of long-term lows. The euro has settled above 1.0500, struggling around 1.0560 where the mentioned SMA arrives. On the downside, the immediate support now arrives at 1.0530, followed by the 1.0500 figure. Should the latter withstand the potential selling pressure, a bounce could be expected on the condition that US Treasury yields refrain from another rally.
