EUR/USD retreats from daily highs, consolidates gains around 1.2050
- EUR/USD rose to a daily high of 1.2076 on Monday.
- US Dollar Index stays in the negative territory around 91.00.
- Falling US T-bond yields weigh on USD at the start of the week.
The EUR/USD pair started the new week in a calm manner spent the first half of the day moving sideways a little above 1.2000. With the greenback coming under renewed selling pressure during the early American trading hours, the pair gained traction and reached a daily high of 1.2076 before going into a consolidation phase. As of writing, EUR/USD was up 0.33% on the day at 1.2055.
DXY retreats to 91.00 area
The data from the US revealed on Monday that the economic activity in the manufacturing sector continued to expand at a robust pace in April. However, the ISM Manufacturing PMI arrived at 60.7 and fell short of the market expectation of 65.
Although the initial market reaction to this data was largely muted, the US Treasury bond yields turned south and forced the US Dollar Index (DXY) to drop to a daily low of 90.86. At the moment, the benchmark 10-year US T-bond yield is losing 1.3% on the day and the DXY is down 0.32% at 91.00.
In the meantime, Wall Street's main indexes opened in the positive territory on Monday and made it difficult for the DXY to stage a rebound.
Later in the session, FOMC Chairman Jerome Powell's speech will be watched closely by market participants.
There won't be any significant data releases featured in the European economic docket on Tuesday and the USD's market valuation is likely to continue to drive EUR/USD's action.
Technical levels to watch for