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EUR/USD holds near late May highs as hawkish Fed and Iran risks support USD
EUR/USD is pausing after a 200-day SMA and Fibonacci-based breakout, with traders watching for a move above 1.1700 and monitoring US data for direction.
EUR/USD is consolidating in a bullish tone after reaching its highest level since late May during the Asian session, according to FXStreet. The pair is hovering near late-May highs and bulls are waiting for a break above 1.1700 to extend an advance that has been unfolding for more than three weeks.
FXStreet links the USD’s support to a shift in US rate expectations and bond-market moves. The US dollar steadied after previous-day losses driven by a slump in Treasury yields to a three-month low, after the US Treasury said it would at least double purchases of longer-dated government debt from September to keep borrowing costs in check.
The outlook for Fed policy remains a key driver. Minutes from the July 28 to 29 FOMC meeting showed officials indicating they would need to raise rates soon unless there is more progress on inflation, and FXStreet also points to inflation risks from higher oil prices.
Geopolitical risk is adding to demand for the dollar as well. FXStreet cites President Donald Trump’s remarks about the US launching a “most crushing” economic operation against Iran, along with a continued deadlock between the US and Iran over the Strait of Hormuz, which it says keeps a war-risk premium in play.
Technically, FXStreet notes that an overnight breakout above a key 200-day simple moving average and the 61.8% Fibonacci retracement of the April to June decline helped trigger buying. Upside targets include the 78.6% Fibonacci retracement around 1.1733 and the recent cycle high near 1.1845, while immediate support is seen near 1.1646, reinforced by the 200-day SMA around 1.1630, as traders look to US data later in the North American session for additional momentum.
Latest closeEUR/USD 1.157 ▲0.4%