- EUR/USD remains on the defensive as DXY tracks rising yields.
- ECB Minutes showed a divided outlook on inflation, risk tone remains bullish.
- Yields and the dollar make their way as US economic data fails to impress.
The EUR/USD remains below 1.1350 as the US dollar tries to bounce along with Treasury yields amid a state of risk appetite.
Sentiment on Wall Street improved dramatically in anticipation of corporate earnings reports. That fueled a further sell-off in US Treasuries, which in turn caused yields to resume their upward trend. The rally in yields lifted sentiment around the dollar at the expense of the euro.
The escalation of the crisis between Russia and Ukraine, with the US imposing sanctions on four Ukrainian officials, accusing them of destabilizing Ukraine, also boosts demand for the US dollar as a safe haven.
Meanwhile, the shared currency continues to be undermined by the European Central Bank’s (ECB) minutes from its December meeting, which underscored policymakers’ division on the inflation outlook. Also, dovish comments from ECB President Christine Lagarde and politician Pablo de Cos bode ill for the pair.
Looking ahead, the major currency pair remains at the mercy of price action in yields and the dollar as traders shrug off mixed US economic data releases in the downbeat weekly Jobless Claims and Sales of existing homes. However, the Philadelphia Fed manufacturing survey for January beat expectations at 23.2.
EUR/USD: Additional Levels to Consider
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