EUR/USD corrects further from 2-year tops, drops to 1.1825-20 area

• EUR/USD once again struggled to find acceptance above the 1.1900 mark on Thursday.
• A modest USD bounce prompted some profit-taking amid near-term overbought conditions.
• Sliding US bond yields might cap the USD uptick and help limit the downside for the pair.

The EUR/USD pair edged lower during the early North American session and refreshed daily lows, around the 1.1825-20 region in the last hour.

The pair continued with its struggle to find acceptance above the 1.1900 round-figure mark and witnessed a modest intraday pullback from over two-year tops, set earlier this Thursday. A modest US dollar rebound was seen as one of the key factors that prompted some profit-taking taking amid overbought conditions on short-term charts.

The USD stalled its recent bearish trajectory and found some support on Thursday following the release of better-than-expected US Initial Weekly Jobless Claims. The USD bulls further took cues from some optimistic comments by the US Senate Majority Leader Mitch McConnell, saying that lawmakers will resolve their differences and reach a deal on stimulus in the near future.

Meanwhile, the ongoing downfall in the US Treasury bond yields might hold investors from placing any aggressive USD bullish bets and help limit the downside for the EUR/USD pair. In fact, the yield on the benchmark 10-year US government bond dropped back closer to an all-time closing low level of 0.501% amid doubts over the pace of the US economic recovery.

Investors might also refrain from placing aggressive directional bets heading into Friday’s closely watched US monthly jobs report. This makes it prudent to wait for some strong follow-through selling before confirming that the pair might have bottomed out in the near-term and positioning for any meaningful corrective slide.

Technical levels to watch