EUR/USD goes into consolidation after dropping below 1.1230
- EUR/USD erased more than 100 pips after climbing above 1.1350.
- Broad-based USD strength during American session caused pair to change direction.
- US Dollar Index steadies around 97 following Monday's fall.
The EUR/USD pair touched a daily high of 1.1353 during the European trading hours but reversed its course in the second half of the day. After erasing more than 100 pips and slumping to a daily low of 1.1228, the pair seems to have gone into a consolidation phase and was last seen losing 0.5% on the day at 1.1267.
DXY stages decisive rebound
The upbeat market mood on Tuesday made it difficult for the greenback to find demand. Although Wall Street's main indexes opened sharply higher, the USD started to gather strength during the American session on the back of rising Treasury bond yields. As of writing, the US Dollar Index was up 0.4% on the day at 97.01 and the 10-year US Treasury bond was gaining 3.7% at 0.75%.
The data published by the US Census Bureau on Tuesday revealed that Retail Sales in May surged by 17.7% after falling by 14.7% in April.
Commenting on the data, Jerome Powell, Chairman of the Federal Reserve System, said sales figures were evidence that demand was being supported. However, Powell further noted that a full economic recovery was unlikely until the public is confident that the coronavirus outbreak has been contained. "Significant uncertainty remains about the timing and strength of the US economic recovery," Powell told the Senate Banking Committee.
On Wednesday, the Consumer Price Index (CPI) for the euro area will be featured in the European economic docket. Later in the day, FOMC Chairman Powell will testify before the Senate on the second day of the semi-annual monetary policy report.
Technical levels to watch for