- EUR/USD remains capped below 1.1775, negative on daily charts.
- The US dollar appreciated amid higher T-Bond yields.
- EUR/USD seen at 1.1700 in three months – Rabobank.
The euro has resumed its downtrend against a stronger US dollar on Wednesday, confirming its decline below 1.1800. The pair found support at 1.1745 but the ensuing recovery attempt is lacking momentum above 1.1775.
The USD rises on the back of higher US T-Bond yields rise
The common currency has extended its bearish reversal from the 1.1915 resistance area, tested on Monday, to levels sub-1.1800 on Wednesday. The US dollar is regaining lost ground as the enthusiasm about an imminent cure for the COVID-19 pandemic subsides and the focus shifts back to the escalating infections in the US and Europe.
The greenback seems to have got rid of the safe-haven status of the last months and is appreciating in parallel with the main equity indexes. The brighter sentiment has prompted investors to get rid of US Government debt, which has sent US T-Bond yields surging. The 10-year Treasury note has reached 0.97% for the first time since March, ultimately boosting USD recovery.
EUR/USD seen at 1.1700 in three months – Rabobank
The FX analysis team at Rabobank, however, does not contemplate a strong downward potential for the EUR/USD and expects the pair to be at 1.1700 in three months: “The combination of cheap money and vaccine hopes is likely to allow for decent levels of risk appetite and, while there are still risks on the horizon, we have curtailed our expectations for another round of USD strength and revised up our three-month EUR/USD forecast to 1.17 from 1.16 and our 6 mth forecast to 1.18 from 1.14.”
Technical levels to watch
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