The Euro (EUR) accelerates its gains against the US Dollar (USD), motivating EUR/USD to surpass the 1.0700 yardstick on Tuesday’s morning in the old continent. On the other hand, the Greenback drifts lower and revisits the 105.60 area when measured by the USD Index (DXY) amidst the continuation of the gradual decline from last week’s top around 106.00. The corrective knee-jerk in the Dollar comes amidst further weakness in US yields across different timeframes, always against the backdrop of a persistent discrepancy between recent hawkish statements from the Federal Reserve and investors’ views suggesting a prolonged pause in the Fed’s normalization program.

Around the European Central Bank (ECB), recent views from Council members keep pointing to a prolonged pause of the current restrictive stance as inflation continues to run hot and well above the target. EUR/USD maintains the constructive stance and breaks above the key 1.0700 hurdle on Tuesday. EUR/USD may return to the November high of 1.0754 (November 6) before hitting the 200-day SMA at 1.0801 and the weekly top of 1.0945 (August 30) if the recovery continues. The psychological threshold of 1.1000 is followed by the August peak of 1.1064 (August 10) and another weekly high of 1.1149 (July 27), both of which precede the 2023 top of 1.1275 (July 18). If sellers retake control, the pair may find temporary resistance at the 55-day SMA at 1.0637, ahead of the weekly low of 1.0495 (October 13) and the 2023 low of 1.0448. (October 15). So far, an additional decline in the pair is expected as long as it continues below the 200-day SMA.