The EUR/USD pair gained momentum and closed on a positive note as improved risk sentiment dampened demand for the US Dollar (USD). However, the pair later reversed its direction and underwent a correction after testing the 1.0570 resistance level. Despite ongoing geopolitical tensions related to the Israel-Hamas conflict, Wall Street's main indexes opened higher and showed significant gains on Monday. In the European session, US stock index futures remained flat, indicating a cautious market sentiment.
On the 4-hour chart, the Relative Strength Index retreated below 50, indicating a lack of bullish momentum after briefly rising above that level on Monday. Investors are closely monitoring the US stock markets, and if major equity indexes continue to build on Monday's gains, the USD might lose its strength, even if US data appears favourable. Conversely, the USD is likely to outperform other currencies if safe-haven flows dominate in the second half of the day.
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