- Euro remains vulnerable versus the greenback amid escalating global trade war.
- Falling Treasury yields to offer temporary relieve, downside still remains compelling.
- Risks a break below 1.1100 ahead of German/ US inflation data.
EUR/USD’s recovery attempts from two-year lows of 1.1106 continue to run into resistance just ahead of 1.1140, leaving the pair consolidating in a tight range amid escalating global trade tensions and ahead of the German Preliminary CPI release.
The spot appears to have found some temporary respite from tumbling Treasury yields, as the US President Trump’s announcement of new tariffs on Mexico intensified global trade war fears and weighed heavily on the risk assets. The US benchmark 10-year Treasury yields sunk to the lowest levels since September 2017 at 2.180%, down 2% so far.
However, in the day ahead, the shared currency could resume its downside momentum, tracking the losses in the Chinese Yuan. Further, the USD bulls are likely to regain poise across its peers, as the sentiment in Europe could be hit by the renewed trade concerns, boosting the demand for the safe-haven US dollar.
Also, the German preliminary CPI figures are expected to come in softer, which may re-ignite Euro area growth concerns and add to the recent EUR bearish bias. Meanwhile, a positive surprise in the US Core PCE Price Index and UoM Consumer Sentiment data could bolster the USD upside, making the downside more compelling in EUR/USD.
EUR/USD Technical Levels
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