Window of opportunity for EUR/USD bulls
May 7 (Reuters) -With both the Fed decision and U.S. payrolls data in the rear-view mirror, which has ultimately taken the shine off the dollar, EUR/USD has grinded higher and is now eyeing a test of its 200-DMA (1.0796).
Treasury yields have continued their descent, the benchmark 10-year now yielding 4.42% and thus, dollar upside is likely to be harder to come by in the near-term. As a result, there is a window of opportunity for EUR/USD bulls, though, a close above the 200-DMA will be needed to exacerbate topside momentum.
For now, given the recent run of soft data, the U.S. exceptionalism narrative has waned, as indicated by the U.S. Citi Surprise Index – the difference between the actual release and economic forecasts – hovering at its the lowest level since early 2023. In turn, there is room for traders to trim stale dollar longs, which have become crowded.
Looking ahead, with little in the way of notable data until the May 15 U.S. CPI release, price action is likely to be somewhat contained.
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usd vs us 10yr https://tmsnrt.rs/3wtd9Ll
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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