EUR/USD highs fresh highs above 1.1230 as DXY extends losses

• US Dollar tumbles against G10 currencies as Wall Street declines. 
• EUR/USD back into positive territory, eyes weekly highs. 

The EUR/USD pair gained momentum during the American session amid a weaker US dollar against majors, as equity prices in Wall Street turned negative, and US yields deep to the downside. 

Risk aversion back in place 

The Dow Jones is falling more than 1% while gold and US bonds soar. Worries about global growth prospects weigh on market sentiment. The greenback is falling gains G10 currencies while at the same time rises versus emerging market currencies. 

Concerns about the global economy were seen today on larger-than-expected rate cuts by the RBNZ and also the central banks in India and Thailand. Expectations about rate cuts from the Federal Reserve are on the rise pushing US yields sharply lower. The 10-year fell to 1.62%, the lowest since mid-2016. 

The escalation in the trade war between the US and China was a critical event that triggered the demand for safe-haven assets. The yen, the Swiss Franc and gold are the biggest gainers today while Emerging market currencies (excluding TRY) are falling sharply. The Euro benefits partially from the risk aversion environment as it extends gains versus the Pound but weakens against the Swissy. 

Bullish, looking at the critical 1.1250 

At the moment of writing, the EUR/USD pair trades at 1.1230 looking at the critical resistance seen at 1.1245/50. A break higher could lead to more gains targeting 1.1280 that protects the 1.1300 area. 

To the downside, immediate support is seen at 1.1210, followed by the 1.1160/65 area. A slide well below 1.1160 would remove the bullish short-term outlook.

More Levels