EUR/USD peeps above 1.16 as 10Y T-yield hit 3-week low
- Talk of tax reform delay & the weakness in the treasury yields weigh over the USD
- EUR/USD prints a session high of 1.1606
The EUR/USD is mildly bid this Wednesday morning in Asia, tracking the drop in the 10-year treasury yield to a three-week low of 2.3 percent.
Having printed a session high of 1.1606, the EUR/USD now trades just below the 1.16 mark. The 10-year US Treasury yield is working hard to defend the psychological support of 2.3 percent.
The greenback ran into a minor wave of offers after a Washington Post report said that US Senate Republicans may delay the corporate tax cuts by 1 year. Also working against the USD is the weakness in the US equity index futures. As of writing, the S&P 500 index is down 4 points or 0.16 percent. Losses in the equities tend to push the 10-year yield down.
Looking ahead - The focus remains on the 10-year treasury yield. USD selling could gather pace if the yield suffers a break below 2.3 percent. Adam Button from AshrafLaidi.com writes, "Trump will be a risk in the day ahead as he meets South Korean President Moon. Initial dialogue and comments were more constructive on the possibility of a deal with North Korea but the mood could shift any moment."
EUR/USD Technical Outlook
Kathy Lien from BK Asset Management writes, "technically, the EUR/USD still appears to be headed lower but waiting to sell closer to 1.1610 may be better than underneath the round number."
FXStreet Chief Analyst Valeria Bednarik details the technical picture as follows-
" In the 4 hours chart, the 20 SMA gains strength downward above the current level, acting as a dynamic resistance in the 1.1610/20 region, while technical indicators in the mentioned chart have managed to bounce from nearly oversold readings, but remain within negative territory. Beyond the mentioned resistance, the pair can correct higher, up to the critical 1.1660/70 price zone, where selling interest will likely resurge. The daily low at 1.1553 is the immediate support, with a break below it favoring a new leg lower which could end up testing the 1.1460 region."
Support levels: 1.1575 1.1540 1.1510
Resistance levels: 1.1630 1.1670 1.1700