EUR/USD consolidates above 1.2000 as USD bulls take a breather

• EUR/USD is in downside consolidation amid risk-off market mood.
• US dollar clings to overnight recovery gains while the yields steady.
• J&J covid vaccine news fails to cheer the euro amid rising cases.

EUR/USD  has stalled its rebound below 1.2050, consolidating the recent losses above 1.2000 ahead of the European open.

The US dollar holds onto the recovery gains amid a downbeat market mood, undermined by the continued surge in covid infections and the re-imposition of stricter restrictions worldwide. The US Treasury yields stabilize at higher levels amid ongoing developments around President Joe Biden’s infrastructure proposal.

On the EUR-side of the equation, Johnson & Johnson’s resumption of the covid vaccine rollout in Europe, with a safety warning, after the European Medicines Agency (EMA)  approval, has been overlooked by the euro bulls, as the broader market sentiment leads the way.

Investors also turn cautious ahead of Thursday’s European Central Bank (ECB) monetary policy decision, especially in light of Fed Chair Powell’s latest comments. Powell said on Tuesday that the central bank remains fully committed to both legs of the dual mandate. “The ECB is set to leave its policy unchanged in April but acknowledge a brighter outlook,” FXStreet’s Senior Analyst Yohay Elam notes.

EUR/USD technical levels

FXStreet’s Analyst Anil Panchal notes, “”¦the recent losses are likely to mount as short-term sellers aim to revisit the horizontal area established from March 02, around 1.1990. Meanwhile, corrective pullback beyond the 61.8% Fibonacci retracement level of 1.2037 will not be an open invitation to the EUR/USD buyers as the recent peak, as well as the one marked in early March, respectively around 1.2080 and 1.2115, be the tough resistances.”

EUR/USD additional levels