EUR/USD drops to multi-month lows below 1.1800 as USD regathers strength
- EUR/USD came under bearish pressure in late American session.
- US Dollar Index climbs above 92.70 on rising US Treasury bond yields.
- Annual CPI in US jumped to 5.4% in June.
The EUR/USD pair dropped below 1.1800 in the early American session following the US inflation report but managed to stage a recovery toward 1.1840. With the greenback regaining its strength in the last hour, the pair turned south once again and was last seen trading at its lowest level since early April, losing 0.66% on the day at 1.1782.
USD capitalizes on rising US T-bond yields
Earlier in the day, the US Bureau of Labor Statistics reported that inflation in the US, as measured by the Consumer Price Index (CPI), rose to 5.4% on a yearly basis in June. This reading beat the market expectation of 4.9% and helped the USD outperform its rivals. However, the underlying details of the report reaffirmed the view that the rising price pressures are due to temporary factors and the US Dollar Index (DXY) struggled to preserve its bullish momentum.
In the meantime, the weak demand seen in the 30-year US Treasury bond auction triggered a rally in the T-bond yields and provided a boost to the USD. Currently, the DXY is up 0.55% on the day at 92.74 and the benchmark 10-year US T-bond yield is rising 3.45% at 1.413%.
On Wednesday, May Industrial Production data will be featured in the European economic docket. Later in the day, FOMC Chairman Jerome Powell will present the Fed's semiannual report to Congress on the state of the US economy.
Technical levels to watch for