(Bloomberg) -- The euro’s rally against the dollar has stalled over the past month at resistance around its May high. Bulls are hoping Thursday’s US inflation data will provide enough ammunition for it to breach that barrier and resume its progress toward $1.10.
The shared currency has strengthened almost 14% from a two-decade low of 95.36 US cents set in November as traders have wound back bets on Federal Reserve interest-rate hikes. Still, the euro has so far been unable to break above the level of $1.0787 reached on May 30.
Narrowing bond yield spreads between the US and Europe suggest the euro will test the May high if Thursday’s US consumer-price data shows some expected signs of moderation, according to Canadian Imperial Bank of Commerce.
A breach of the May high may see the pair test the April 25 high of $1.0851, while above that there is strong resistance at $1.0936, said Jeremy Stretch, head of Group-of-10 strategy at CIBC in London.
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Others are more bearish.
“I remain skeptical that EUR/USD can extend its recent gains without a meaningful shift in the fundamental outlook for the pair, given that it already looks expensive relative to our short-term fair value of 1.05,” said Valentin Marinov, head of Group-of-10 FX research and strategy at Credit Agricole CIB in London.
(Source : Bloomberg) , all rights reserved by original source.