The dollar found momentum as the bond yields on 10-year U.S. Treasury raised to 3.025%, the highest level in three weeks. A rise above the high of 3.035% reached on April 25 would take it to its highest since early 2014.
U.S. bond yields were enhanced by signs of trade tensions between the U.S. and China calming down after U.S. President Donald Trump promised to help Chinese technology company ZTE
This also affected the Dow and S&P 500 who both passed the previous peak which came almost a month earlier in what could be an indication of ending the correction.
We have to keep an eye on retail sales, which is expected to be good for the second month in a row. Core retail sales are also expected to be good, which is likely to be 0.5%.
The UK Average Earnings Index came in below expectations with 2.6%. This will put more pressure on sterling which will make traders concerned about any rate hike soon
German GDP came in at 0.3%, close to the forecast of 0.4%. Eurozone GDP came in at 0.4%, matching the forecast. German ZEW Economic Sentiment came in at -8.2, weaker than the estimate of -8.0 points. Eurozone ZEW Economic Sentiment was stronger, improving to 2.4 points. This beat the estimate of 2.0 points
On the daily chart, the price had a false break beneath the support zone 0.75-0.7535. That enhances the harmonic pattern AB=CD. The pair had made a price action (pin bar) in this false break to boost the bullish bias. The pair is moving onto the support zone now. Along with divergence in RSI and breaking the lower trend line as shown, the price is ready for the next move up to 0.7635 then 0.7715.
On the daily chart, the price had made its way into the resistance zone 1.2925-1.3, with an approach from the descending trend line from the high of 2015. The price reversed from these levels, breaking beneath the key support level 1.28 and returning back to it. If the daily candle closes under this level again, it will prompt the price to be bearish to the support zone 1.252-1.243.