The dollar remains strong at the end of the month. Although the US currency has had several weeks of appreciation behind it and the latest signals from the Fed, ie readiness to accept the temporary intensification of inflation could suggest that a correction is necessary. The main driving force behind the dollar was the sharp rise in debt yields. The recent intensification of risk aversion and withdrawal on the oil market made the benchmark ten-year profitability dropped to 2.90 in more than a dozen days, it dropped by as much as 20 bp.
Italian problems with the formation of the government evolve into a constitutional crisis, and the dynamics of events in the case of early elections (September) favors the extreme right and anti-establishment fractions. This exerts a strong influence on the situation on the bond market and at the same time may result in postponing the date of policy standardization. Draghi, joining the debt crisis, announced several years ago that the ECB would do everything it could to suppress the spiral of the sale of government bonds. The bank achieved great success at a great expense, but now it would be a mistake to normalize the policy too fast, all the more so because core inflation does not show obvious signs of acceleration. Even without political chaos, the Euroland's economy surprisingly slowed down. It is worth noting that investors in this environment cool their enthusiasm for the prospects of European banks - industry subindex Stoxx 600 falls from 10 May by more than 5.0% and stands on the edge of opening the path to even deeper slide. This is an interesting issue because during the sovereign debt crisis the relative strength of the stock market indices was significantly correlated with the EUR/USD exchange rate.
Let's then take a look at the EUR/USD technical picture at the H4 time frame. The bears have managed to push the price lower towards the level of 1.1509, which was just above the important daily technical support at the level of 1.1545. The market conditions remain extremely oversold on multiple time frames, but there is still no sign of a correction. The nearest technical resistance is seen at the level of 1.1644. The key level to the upside remains at 1.1746.
