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  • EUR/USD halts a four-day rally and retreats to 1.1800.
  • The US dollar bounces up on higher US T-Bond yields.
  • EUR/USD remains biased higher, looking to test 1.2011 – Credit Suisse.

The euro has put an end to a four-day rally on Monday after been rejected at 1.1920. EUR/USD’s rally from 1.1600 lows last week has been capped ahead of 1.2000 and the pair has pulled back against a stronger dollar before finding support at 1.1800 area.

The US dollar appreciates on surging US Treasury yields 

The common currency has suffered against a stronger US dollar, fuelled by higher US Treasury Bond yields. Investors’ optimism about a coronavirus cure after Pfizer announced that its vaccine is 90% effective, boosted the 10-year Treasury note 13 basis points to 0.95%, with the benchmark rate reaching 0.975%, its highest level since March.

The US dollar has appreciated against a basket of the most traded currencies on Monday in spite of an initially negative reaction to the risk rally triggered by the first reports of the vaccine. The greenback, however, bounced up from lows and the US Dollar Index ended up appreciating about 0.60% on hopes that a COVID-19 cure might ease the pressure for a large stimulus package.

EUR/USD seen higher, aiming towards 1.2011 – Credit Suisse

FX analysts at Credit Suisse remain bullish on the euro, while above 1.1795/71, with the pair likely to test 1.2011: “We see resistance at 1.1918 initially ahead of 1.1962/66 and then the 1.2011 September high. Whilst this should again be respected, we look for a break in due course for our 1.2145/55 first core upside objective – the ‘neckline’ to the early 2018 top and 78.6% retracement of the 2018/2020 bear trend. Whilst we would expect a fresh phase of consolidation to emerge here, the big picture, we continue to look for strength to extend above 1.2500.” 

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