- EUR/USD cheers broad US dollar retreat, although surging Treasury yields weigh.
- Stellar US NFP report lifts risk tone, drives the rally in Treasury yields.
- Europe’s covid and economic growth concerns undermine the euro.
- Focus shifts to the US ISM Services PMI as Europe celebrates Easter Monday.
EUR/USD trades better bid in early Europe, holding onto the bounce from near 1.1750, as the upbeat market mood weighs down on the safe-haven US dollar.
The market sentiment remains buoyed by the stellar US Nonfarm Payrolls data that pointed to quicker US economic recovery. The economic optimism could prompt the Federal Reserve (Fed) to hike rates earlier than it has suggested.
The rising-rate hike expectations coupled with President Joe Biden’s infrastructure plan continue to push the US Treasury yields higher, with the short-term rates on the markets sharply higher. Surging yields, however, could limit the bounce in EUR/USD.
Additionally, ongoing covid concerns in Europe, slower vaccination rate and the French government lowering its 2021 GDP growth forecast could also likely weigh on the shared currency.
With most major European markets closed due to Easter Monday, the traders are likely to pay close attention to the dynamics in the yields ahead of the US Services PMI release.
EUR/USD: Technical levels
“the receding bullish bias of the MACD and a multi-day-long resistance line around 1.1785 could challenge the EUR/USD bears. a horizontal area comprising the early March lows and 100-SMA around 1.1835-45 will be a tough nut to crack for EUR/USD buyers. On the flip side, the previous resistance line around 1.1715 and March’s low, also the yearly bottom, surrounding 1.1700, will be the key levels to watch before November 2020 trough near 1.1600,” Anil Panchal at FXStreet explains.
EUR/USD: Additional levels
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