EURUSD briefly jumped to weekly highs marginally below the 1.13 handle yesterday. But the pair failed to preserve gains and closed below the 100-DMA. On Friday, the euro demand reemerged and sent the prices back to the 1.1270 area. Despite the bullish bias, downside risks for the common currency persist.
The recent ascent in EURUSD is mostly due to a broad-based dollar weakness. Yesterday, Fed’s Powell confirmed the central bank’s dovish stance and pressed the greenback down once again despite stronger-than-expected US core CPI data. As such, the Federal reserve seems to be ready for tightening later this month in spite of bullish signals from the job market and inflation as broader economy shows signs of weakness and needs support from the monetary authorities, especially on the back of the ongoing trade war between the US and China.
But the current EURUSD dynamics shows that the euro is not ready for a sustainable rally, and traders prefer to take profit on bullish attempts despite dollar weakness. As such, the pair could challenge the 1.13 barrier in the short term but it will hardly make a decisive break as the Eurozone economy is slowing as well and the ECB also hints at some additional stimulus.