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EUR/USD is at the peak of the bull cycle that began at the end of September due to the weakening of the US Dollar. So far on Tuesday, the Euro is 0.12% higher at 1.0507, having risen from 1.0489 to 1.0507.

However, the US Dollar has been the primary driver since the beginning of the week, and today's bid reflects little of what occurred to risk appetite on Monday. Observers anticipate that the Federal Reserve will raise interest rates by a greater amount than previously anticipated due to the unanticipated November growth in the US Services industry.

DXY, an index that measures the US Dollar versus the greenback, has returned to the 105 region following a rebound from the 104.11 lows of the bearish cycle in November. As a result, the Euro was weaker at the opening of the US session for the week, as the data contributed to a flight to safety following the waning of market optimism over possible COVID restrictions easing in China.

Several Chinese localities relaxing their COVID restrictions in what appears to be a shift toward progressive reopening as the country approaches its fourth year of the pandemic has boosted investors' appetite for risk. Nevertheless, despite the partial easing, numerous limitations remain in place, and in some regions of the country, fresh lockdowns and travel restrictions continue to be enforced.

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