EUR/USD erases losses, climbs back above 1.2200 as USD weakens

• DXY turns flat on Wednesday, back under 90.00.
• EUR/USD rebounds at the 20-day simple moving average, eyes daily highs.

The EUR/USD rose fifty pips from the daily low it reached hours ago at 1.2163, and recently it climbed to the 1.2215 area, erasing daily losses. The move higher took place amid a decline of the US Dollar across the board.

The DXY is falling 0.05% at 89.88, after hitting earlier at 90.24, the highest level since Friday. An improvement in risk sentiment and a decline in bond yields pushed the greenback to the downside. The 10-year yield dropped to 1.59% moving further away from 1.64% (June 1 high). The Dow Jones gains 0.35% and the Nasdaq 0.17%.

The focus is on Friday’s NFP report for May. In a few hours, the Federal Reserve will release the Beige book about the state of the economy. On Thursday, jobless claims and the private ADP employment report are due.

Strong rebound from key SMA

The EUR/USD bottomed at 1.2160, the area near the 20-day simple moving average. The same situation took place on Friday. The upside in the pair continues to be limited by 1.2230 and 1.2250. A daily close above 1.2230 would expose the May top at 1.2265. A close above 1.2250 would point to more gains.

While the pair remains under 1.2230, it will likely continue to move sideways. A daily close under 1.2160 would be negative for the euro.

Technical levels