- EUR/USD turns south again as DXY rebounds on halt in yields’ decline.
- Eurozone Q4 GDP was revised down, macro-divergence favors the USD.
- US CPI holds the key ahead of the bond auction.
EUR/USD extends losses towards 1.1850 heading into early European trading, having failed to find acceptance above 1.1900 on several occasions.
The retreat in the main currency pair comes on the back of the resurgent US dollar demand, as the Treasury yields halt their corrective decline from 13-month tops and look to stabilize.
Meanwhile, the spot also bears the brunt of the risk-off mood, as markets remain cautious and refrain from placing any fresh bets ahead of the critical US CPI data, the House vote on the $1.9 trillion stimulus bill and Thursday’s European central bank (ECB) monetary policy decision.
On the EUR-side of the equation, the euro markets shrugged-off the downward revision to the Eurozone Q4 GDP rate and the upbeat German trade data, as the sentiment remained driven by the Treasury yields price action.
In the day ahead, the major could extend its declines towards the 1.1850 level if the risk-aversion deepens and further boosts the haven demand for the US dollar. The focus will remain on the US stimulus news and CPI data for fresh trading impetus.
EUR/USD: Technical levels
“Although failures to keep the bounce from the crucial SMA, coupled with a sustained break of earlier support line, favor EUR/USD sellers to target 1.1831 level, comprising 200-day SMA, any further weakness may have to reject nearly oversold RSI. Meanwhile, fresh run-up will eye the previous support line, at 1.2000 now, ahead of the monthly top near 1.2115,” Anil Panchal, FXStreet’s Analyst explains.
EUR/USD: Additional levels
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