EUR/USD extends rally toward 1.1350, hits 2-month highs as US Dollar tumbles

• US Dollar keeps falling across the board as Wall Street soars. 
• US yields hit fresh lows as odds of a Fed rate cut rise. 

The EUR/USD pair rose further above 1.1300 and reached at 1.1346, the highest intraday level since March 22. As of writing, it trades at 1.1335/40, up 60 pips for the day and more than 150 pips on top of the level it had a week ago. 

The move higher was boosted by a decline of the greenback across the board. The DXY dropped below 96.50, to the lowest since mid-March, it is falling 0.55%. Monetary policy expectations weigh on the US dollar, particularly after the NFP report. “Job growth has slowed, with firms adding only 75K jobs in May and previous months' gains revised lower. While the labor market remains tight, the slowdown adds evidence to a weaker outlook for growth”, wrote analysts at Wells Fargo. 

The weak data pushed equity prices to the upside in Wall Street as market participants start to price in rate cuts from the Fed. The DOW JONES is up 1.20%, and the NASDAQ gains 1.72%. In the bond market, Treasuries are back on the rise. The 10-year yield fell to 2.059%, the lowest since September 2017. 

Levels to watch 

The pair holds near the highs, with the bullish momentum strong. Above 1.1350 the next resistance might be seen at 1.1365 followed by 1.1400. On the flip side, now 1.1310 emerges as the immediate support and then 1.1280 and 1.1250 (June 7 low).