- EUR / USD extends the three-day downturn amid a relentless rise in US yields.
- The optimistic Fed turnaround and optimism about the economy lift yields along with the dollar.
- An imminent bearish crossover points to a breakout of the critical support at 1.1683.
EUR / USD is down for the third day in a row, pressing the pivot support near 1.1683, as bears remain relentless amid the current rally in US Treasury yields.
The optimistic shift from the Fed last week combined with the request from central bank policy makers to start tapering has benefited yields along with the US dollar. 10-year Treasury yields have risen to 1.52%, the highest levels seen since June 28.
Meanwhile, ECB President Christine Lagarde has left the doors open for higher inflation, adding that there is “every reason to believe” that the rebound in energy prices and supply bottlenecks will end. they would ease next year.
Later in the day, the currency pair will remain at the mercy of buoyant yields and the dollar as investors wait for Lagarde and Powell to take center stage for the second day in a row on Tuesday.
Looking at the EUR / USD daily chart, the price is testing the critical support of the uptrend line at 1.1683, with a daily candle closing below this level being necessary to validate a break to the downside.
Immediate support is seen at 1.1664, the August lows, below which the 1.1650 psychological level will come into play. Lower down, the 1.1600 level could challenge bullish engagement.
The RSI) is pointing lower below the midline, supporting the case for further weakness in the pair.
EUR / USD daily chart
On the other hand, recapturing the 1.1700 level is critical to initiate a tepid recovery towards the range highs around 1.1750.
But an impending bearish crossover in that time frame suggests investors should resort to a “sell the bounce” strategy amid the recent downside momentum.
The 21-day moving average is about to cut the 50 SMA from above, showing a bearish signal.
EUR / USD additional levels
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