EUR/USD fails to hold above 1.14, slides toward mid-1.13s as USD recovers

• US Dollar Index turns positive on the day.
• US 10-year T-bond yield rebounds strongly on Tuesday.
• ECB’s Nowotny warns about Italy’s debt.

After closing the first two days of the week in the positive territory, the EUR/USD pair struggled to preserve its bullish momentum and is now looking to end the day with modest losses. As of writing, the pair was down 0.15% on a daily basis at 1.1365.

Earlier in the day, the European Commission’s Business and Consumer Survey showed that the Consumer Confidence Index improved to -7.4 in February from -7.9 in January. Other components of the report showed that the Services Sentiment Index, Business Climate Index also rose in the same period while the Industrial Confidence Index fell to -0.4 from 0.6 in January.  

Meanwhile, European  Central Bank (ECB) Governing Council member Ewald Nowotny told Italian newspaper La Stampa that Italy’s  debt was a threat to the EU. Additionally, commenting on the ECB’s policy outlook,  Deutsche Bundesbank President Jens Weidmann argued that there was no acute need to adjust the ECB’s rate guidance and explained that the normalisation of the monetary policy will be a gradual process.

On the other hand, despite a lack of significant macroeconomic data releases from the United States, the US Dollar Index gained traction in the NA session and moved into the positive territory supported by a sharp upsurge seen in the Treasury bond yields. At the moment, the 10-year reference is up 1.75% while the DXY is adding 0.15% at 96.17.

Technical outlook

The pair could face the first support at 1.1345/35 (Feb. 26 low/20-DMA) ahead of 1.1275 (Feb. 19 low) and 1.1230 (Feb. 15 low). On the upside, resistances are located at 1.1380 (100-DMA), 1.1440 (Jan. 28 high) and 1.1500 (psychological level).