From a technical perspective, the pair is also seeing a modest bounce off support around 1.0400 if you go by the weekly chart. With broader risk sentiment also faring better today, the dollar is seeing a bit of a pullback against other major currencies.
But EUR/USD did get a jolt from 1.0480 to 1.0520 on the back of Knot's remarks here. At this stage, a July rate hike is all but a given but he floated the idea of a potential 50 bps rate hike and that is getting markets a tad bit excited.
The ECB does have its fair share of courting the dramatic but one must take into account that Knot is one of the more hawkish members and for a central bank that hasn't hiked rates in over a decade, it is tough to buy into a sudden major shift in mentality from a majority dove to an uber hawkish one.
Nonetheless, money markets are now pricing in roughly 105 bps worth of rate hikes before year-end by the ECB. That compares with the roughly 95 bps as of yesterday.
EUR/USD has now cleared its 200-hour moving average @ 1.0494 and a hold above 1.0500 does allow for buyers to establish some breathing room after an unrelenting push lower since the start of the year. The region around 1.0580-00 will offer some minor resistance next before we start to really come up with potential Fib levels to be tested.