- EUR / USD is consolidating the decline before the next move down.
- The persistent strength of US yields on the Fed’s downsizing risks weighs on the euro.
- EUR / USD is looking for a downside breakout of the key descending trend line.
The EUR / USD pair fell for the fourth day in a row on Friday, as stronger US Treasury yields continue to constrain euro bulls.
US yields rise to their highest level in four months amid impending Fed tapering, which could be confirmed by an upbeat NFP later in the day.
Meanwhile, the resurgence of fears about China’s indebted real estate market has outpaced optimism fueled by the successful Senate vote on the extension of the US debt ceiling. The resurgence of risk flows raised demand for the safe-haven dollar at the expense of the euro.
At the time of writing, the EUR / USD is trading at 1.1548 and down 0.03% on the day, awaiting US NFP non-farm payroll data for the next directional move.
From a short-term technical perspective, the currency pair is about to break the critical support line, which has been running since the beginning of July, at 1.1541.
A further decline could begin after a daily close below this level, putting the 14-month lows of 1.1529 at risk.
Lower down, the round 1.1500 level could be put to the test, opening the doors towards the mid-2020 levels around 1.1450.
EUR / USD daily chart
However, with the RSI inside oversold territory, currently at 27, a temporary pullback in the pair could be on the table.
A significant recovery is likely to start only after acceptance above the 1.1600 level. Oct 4 highs of 1.1640 will be the next target for the bulls.
EUR / USD additional levels
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