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We’re seeing a broad wave of selling in the dollar now as the retreat this week continues to play out. The greenback is struggling amid a shove lower in bond yields, with 10-year Treasury yields down another 5 bps today to 4.058%. For some context, yields peaked at 4.335% at the end of last week.
This is seeing a notable push in dollar pairs with EUR/USD also rising back up to parity for the first time since 20 September. It’s a big level for the pair now with large option expiries also in play at the key level all before the ECB pulls the trigger tomorrow.
The latter will be a massive risk event for the pair and will be part of the consideration amid the prevailing dollar sentiment at the moment.
Looking at the technicals, EUR/USD faces key resistance closer to the 100-day moving average (red line) at 1.0092 should it push past parity with the 12 September high near 1.0200 the next region to watch thereafter.
As much as the pair is looking for a solid bounce, the key still lies with the Fed and unless the status quo changes or the Fed resolve is seen as weakening next week, I would argue that sellers will come back in should we start to run into the key levels above.
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