- EUR/USD’s two-day drop has exposed the 50-day SMA support.
- Growth concers likely to keep the EUR under pressure ahead of Friday’s PMI data.
- A continued rise in US Treasury yields could bode well for the dollar.
EUR/USD looks south, with markets worried about the negative impact of coronavirus lockdown restrictions on the Eurozone’s economy.
“Many countries in the Eurozone, Germany included, remain in strict lockdown,” BK Asset Management’s Kathy Lien noted, adding that, “With virus variants spreading quickly in Germany and vaccine rollout happening painfully slow, the sentiment is very weak.”
That’s evident from EUR/USD’s 0.59% drop on Wednesday, which happened despite a stronger ZEW survey. Investors could sell euros ahead of Friday’s PMI numbers, pricing in the possibility of the data missing estimates in a sign of renewed economic weakness.
Therefore, the pair looks set to extend the drop from 1.2169 to 1.2040 seen in the past two trading days. The immediate support is located at 1.1996 (100-day Simple Moving Average).
A continued rise in the US Treasury yields may add to bearish pressures around EUR/USD. “Sentiment will remain mildly bearish while US yields remain elevated,” according to Reuters.
The 10-year yield is currently sidelined near 1.27%, having risen from 1% to 1.33% in the 20 days to Feb. 17. Aside from that, the minutes of the European Central Bank’s February meeting scheduled for release at 12:30 GMT today could influence the pair.
EUR/USD is trading near 1.2036 at press time, having put in a high of 1.2050 in Asia.
Technical levels
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