- The US dollar maintains gains amid risk aversion and higher yields.
- The euro fails to recover ground, remains under pressure.
- EUR/USD is headed for the lowest close in two weeks.
The EUR/USD posted a fresh weekly low below 1.1300 during the US session as the US dollar remained strong on the back of risk aversion and higher US yields. The pair bottomed out at 1.1288, before rebounding modestly.
EUR/USD is back below the 20-day SMA
The correction from last week’s high near 1.1500 has turned into a possible reversal. EUR/USD is now hovering around 1.1300, back below the 20-day SMA (1.1330), about to post the second-lowest daily close of the current month. The pair is back in the range of 1.1250/1.1360.
A recovery above 1.1370 should put the euro back on track towards 1.1400 and higher. The next resistance is located at 1.1450; Earlier attention would be drawn to the 1.1480/90 area that capped the upside last week and also in January.
Higher returns despite risk aversion
Stock prices on Wall Street failed to stay in positive territory. The Dow Jones falls 0.65% and the S&P 500 0.21%, the Nasdaq is the exception as it gains 0.85%. Caution still prevails in the financial markets that support the demand for the dollar.
US yields have also given a boost to the dollar. The US 10-year bond rallied from 1.90% (one-week low) and climbed back above 2.01%, while the 30-year Treasury yield jumped from 2.21% to 2.32% in a few hours.
The attention of market participants continues to be on the tensions between Russia and Ukraine and also on comments from officials at the Federal Reserve and the European Central Bank. After a quiet day on Monday regarding economic data, data including GDP, employment and the ZEW survey in the Eurozone will be released on Tuesday, while in the US, the key number will be the Index Producer Prices.
Technical levels
Source: Fx Street
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