EUR / USD Fails to Sustain Above 1.1900 After Treasury Yields Rise

• Yields on US Treasuries mark month-highs propelling the dollar ahead of the Fed.
• EUR / USD clears gains, remains within small daily range.

The EUR / USD rose as high as 1.1916, hitting a high for the day, but then retraced and is already below 1.1900. The retreat from the highs was due to a general strengthening of the dollar due to a rise in the yields of Treasury bonds. Traders await the FOMC’s decision.

The Federal Reserve will announce its monetary policy decision on Wednesday. No changes are expected. The focus will be on the statement, Jerome Powell’s press conference, and new macroeconomic projections from FOMC members. The market will wait to see what the Fed says about the rise in Treasury yields.

In fact, the yields have picked up pace in the last hour. The 10-year rate reached 1.66%, the highest level since January 2020. This drop in US bonds has driven the dollar into the market. The greenback marked highs on several fronts, although not yet against the euro and the pound.

Short-term outlook

In case of extending the fall, the EUR / USD would go to test the support of 1.1880 / 85, where are the lows of Tuesday and Wednesday. Below the next support is at 1.1855 and then the recent low this year at 1.1830 / 35 will appear on the scene.

In the opposite direction, the key level is at 1.1925. That area, in addition to being a horizontal resistance, is where the moving average of 20 and 55 periods on the four-hour chart is passing. A confirmation above would point to greater strength for the euro. As long as it remains below 1.1925 the bias will point to the downside.

Technical levels