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  • EUR/USD trades near 1.1835 versus 1.18 in early Asia. 
  • Treasury yields retreat from multi-month highs in a USD-negative manner. 
  • Markets focus on the possibility of renewed lockdown restrictions in the US. 

EUR/USD bounces from key support, as treasury yields yield retreat from five-month highs, weakening demand for the US dollar. 

The pair is currently trading at session highs near 1.1835, having found bids around the ascending 5-day simple moving average (SMA) at 1.1812. 

The dollar is losing altitude against most majors, possibly tracking the decline in the US 10-year yield to 0.91% from the five-month high of 0.97%. Markets seem to be reassessing the optimism generated by the US drugmaker Pfizer’s disclosure of the positive initial trial results of its coronavirus vaccine. 

While a viable vaccine is a game-changer for the global economy, it does not take nullify the risk that many US states may soon have to reimpose the economically-painful lockdown restrictions to contain the second wave of the virus. As such, the dollar is giving up gains seen following Pfizer’s announcement during Monday’s US trading hours. The greenback may suffer a deeper decline, pushing EUR/USD higher if the treasury yields extend the Asian session drop. 

Data wise, the focus will be on the German Zew survey due at 10:00 GMT. 

Technical levels

The pair created a big bearish outside day candle on Monday, invalidating the immediate bullish outlook put forward by Friday’s close above the trendline falling from Sept. 1 and Oct. 21 highs and making Tuesday’s close pivotal. 

A bearish reversal would be confirmed if the pair ends Tuesday below Monday’s low of 1.1795. On the higher side, Monday’s high of 1.1920 is the level to beat for the bulls.