EUR/USD retreats toward 1.2200 from fresh monthly highs near 1.2230

• US Dollar gains support from a decline in equity prices and a rebound in yields.
• EUR/USD modestly off highs, heads for the highest close since February.

The EUR/USD printed a fresh two-month high at 1.2233 and then pulled back. After Wall Street’s opening bell dropped to 1.2205, amid a recovery of the US dollar. The greenback trimmed losses, but it remains under pressure.

The Dow Jones opened with losses, the S&P flat and the Nasdaq in positive territory, all indexes off the high of the pre-market session. US yields bounced to the upside over the last hours. The 10-year yield rose from 1.63% to 1.65%, in a few minutes, reaching the highest since May 14.

Outlook still points to the upside

Higher yields and a deterioration in risk sentiment helped the greenback, that trimmed losses across the board. Despite the correction lower, EUR/USD still heads for the highest close since early January.

As long as it remains above 1.2200, the positive tone will remain intact. A decline under 1.2165 could point to a deeper correction. On the upside, resistance levels might be seen at 1.2230 and 1.2240/45 (February highs).

Technical levels