EUR/USD Recovers Near 1.0820 Following a New Yearly Low of 1.0760

The EUR/USD pair has had a brief pullback following Thursday's new yearly low of 1.0757. The shared currency suffered a sharp sell-off following the European Central Bank's (ECB) announcement of an unchanged interest rate policy, which was broadly in line with market expectations.

Technically, the ECB President Christine Lagarde's maintenance of the status quo was already an expectation, and hence the commentary's dovish tone compelled market players to drop the euro. Lagarde clarified the ECB's interest rate guidance, noting that a rate hike will occur only after the 'Asset Purchase Program' (APP) concludes in the third quarter.

The dovish position on future policy announcements is justified by Europe's precarious condition, which includes a higher inflation rate of 7.5% and a poor growth rate amid the Ukraine conflict. The ECB's predicament is about to deteriorate further as oil prices are poised for another upward swing and energy expenses continue to torment European families.

Meanwhile, the US dollar index (DXY) has regained momentum as US Treasury yields have firmed. The DXY is balancing above 100.00 and is likely to extend gains given the volatility in global markets during the long weekend. The yield on the 10-year US Treasury note has snapped a two-session losing trend and reclaimed a three-year high of 2.83 percent. US Treasury yields rise on the Federal Reserve's (Fed) aggressive tightening intentions, as Fed President and FOMC member John Williams stated on Thursday that the Fed should consider a 50 basis point (bps) interest rate hike in May's monetary policy.

EUR/USD