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EUR/USD - Focus on treasury yields & EUR/GBP flows

  • EUR/USD at the mercy of demand of market's appetite for U.S. dollars.
  • The USD could take cues from treasury yields.
  • EUR/GBP flows could influence EUR/USD.

EUR/USD traded as low as 1.1830 yesterday before a late NY session decline in the treasury yields helped the spot moved back above 1.1865 (23.6% Fib R of Nov. 7 low - Nov. 27 high).

Focus on the Treasury yields

The 10-year yield continues to struggle to hold above 2.4 percent. It clocked a high of 2.42 percent on tax reform optimism before falling back to 2.37 percent. The USD could find bids if the yield moves above 2.42 percent. Such a move looks likely if the ISM non-manufacturing betters estimates and shows continued labor market strength.

Meanwhile, there has been no progress on Angela Merkel's coalition talk. Also, as per Telegraph, UK PM May's attempt to reach a Brexit deal on the Irish border has fallen apart after a damaging public row with the DUP. Thus, the EUR/GBP could see big moves and may influence the EUR/USD pair.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, writes - " Technically, the pair has passed through this Monday with a weak tone, and despite it has been unable to break below the 1.1800/10 support area, the risk has lean towards the downside, as in the 4 hours chart, the pair met selling interest on attempts to surpass its 20 SMA, while technical indicators gyrated south, with the Momentum heading lower well into negative territory, and the RSI just modestly now around 45. Below the mentioned price zone, the pair has scope to extend its decline towards the 1.1720/30 price zone, while to the upside, 1.1890, where the pair has its unfiled gap, is key, as only beyond it bulls may have a chance."

Support levels: 1.1805 1.1760 1.1725

Resistance levels: 1.1890 1.1930 1.1960                                    

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