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  • EUR/USD fell 0.10% on Monday, confirming the first five-day losing streak in three months.
  • EUR/USD dropped even though the German Bund yields ticked higher on stimulus talk.
  • Markets are likely worried that the German stimulus may not be strong enough to counter the economic slowdown.
  • A sustained rise in Germa yields may help the EUR end the five-day losing streak.

EUR/USD fell for the fifth straight trading day on Monday despite the uptick in the German bond yields.

The currency pair dropped 0.10% on Monday, having registered 0.38%, 0.29%, 0.28% and 0.15% losses on Tuesday, Wednesday, Thursday, and Friday, respectively.

That is the first five-day losing streak since mid-May. Back then, the pair had dropped for five straight days from May 13 to May 17.

Yields bounce on talk of German fiscal boost

The German 10-year bond yield rose more than six basis points to -0.64% on Monday on reports of German willingness to increase fiscal spending in order to support the struggling economy. The German government could come up with $55 billion (€50 billion) in the stimulus should the country’s economy fall on hard times, German Finance Minister Olaf Scholz said in Berlin on Sunday, according to Bloomberg News.

The EUR/USD pair rose above 1.11 in the European trading hours on Monday, tracking the rise in the yields, only to end the day on a negative note at 1.1078.

EUR’s inability to score gains despite the recovery in yields likely indicates concerns that Germany’s stimulus, if any, will not be enough to buttress the economy.

So, while the path of least resistance remains to the downside, the common currency may end up snapping the five-day losing streak with moderate gains if the German yields continue to rise today. As of writing, EUR/USD is trading at 1.1087, representing 0.10% gains on the day.

An above-forecast German producer price index for July may strengthen the bid tone around the EUR. The data is scheduled for release at 06:00 GMT.

Technical levels