- The EUR / USD recovery lost momentum near 1.1930.
- The dollar reverses initial gains and falls back below 92.00.
- US 10-year yields appear to be capped at 1.70%.
The European currency now manages to post some decent gains and raises the EUR/USD to daily highs in the 1.1930 region, an area that coincides with the 10-day SMA.
EUR / USD attentive to the dynamics of the USD
EUR / USD so far manages well to reverse two consecutive daily pullbacks and returned from lows initially touched in the 1.1870 region.
Steady returns in the US bond markets do not provide additional support to the dollar, with the 10-year benchmark struggling to break above the 1.70% level so far at the start of the week.
Earlier in the session, ECB Board Member Knot said that better fundamentals support the recent rise in yields, although some of that increase appears unjustified. In the same direction, the Fed’s Barkin pointed out that the improvement in the outlook is behind the rise in bond yields.
On the euro agenda, the EMU current account surplus amounted to € 5.8 billion in January (from € 51.9 billion).
What to look for around the EUR
The EUR / USD remains the consolidative / bearish theme unchanged and still supported by the critical 200-day SMA near 1.1850. The strong and persistent stance of the US dollar has been undermining the pair’s earlier constructive view in recent weeks, as market participants continue to adjust to higher US yields and the superior performance of the US economy. USA (versus their G10 peers). However, the firm hand of the ECB (despite some verbal concerns) in combination with the expected rebound in economic activity in the region in the post-pandemic stage will likely prevent a much deeper pullback in the pair.
Technical levels
At the moment, the index is gaining 0.17% to 1.1921 and a breakout of 1.1989 (March 11 weekly high) would target 1.2058 (50 SMA) on its way to 1.2113 (March 3 monthly high). On the other hand, the next support is at 1.1870 (weekly low of March 22), followed by 1.1846 (200-day simple moving average) and finally 1.1835 (low of March 9, 2021).
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