• US stocks tumble, VIX jumps and dollar soars.
• US yields rise to the highest level in years.
• EUR/USD looks to 1.0500 and the cycle low.

The EUR/USD is falling sharply and is about to test the 1.0500 area, weakened by a rally of the US dollar. The pair bottomed at 1.0503, more than 125 pips below the daily high it reached on Asian hours.

What comes fast goes away fast

A stronger US dollar across the board accelerated the decline of the EUR/USD. The greenback benefit as US stocks tumble. The Dow Jones is falling 2.85% and the Nasdaq 4.60%, erasing Wednesday’s gains.

At the same time, US yields are rising sharply to multi-year highs the day after the Federal Reserve rose the key interest rate by 50 basis points. The US 10-year yield stands at 3.07%, up more than 4% and the 30-year at 3.17%, the highest level since December 2018.

Economic data from the US showed Initial Jobless Claims rose unexpectedly to 200K, the highest level in eleven weeks while Continuing Claims printed a fresh historic low. On Friday, the April US official employment report is due.

 A test of 1.0465 seems likely

The technical outlook deteriorated significantly for the euro with the recent reversal. A break under 1.0500 would initially expose the weekly low at 1.0487 and then the 2022 low at 1.0486.

A recovery above 1.0560 should alleviate the current bearish pressure of EUR/USD. Above the next resistance stands at 1.0600.

Technical levels