EUR/USD: Bulls defend key support, focus on treasury yields
|- The EUR defended a key falling trendline support on Tuesday, boosting odds a bullish reversal.
- Rising Treasury yields could complicate recovery in the EUR/USD pair.
The EUR/USD closed on a weak note at 1.1581 yesterday as the uptick in the treasury yields put a bid under the greenback.
However, the daily loss would have been bigger had the pair not rebounded from the intraday low of 1.1530. More importantly, the pair’s recovery from the low of 1.1530 to 1.1581 ensured the support of the descending trendline (drawn from Apr. 18 highs) remains intact.
Further, it attached a long wick to the daily candle, which is usually considered a heads up on direction change.
Indeed, the pair is reporting moderate gains at 1.1597 at the time of writing, having clocked a high of 1.1608 in Asia. However, bull reversal would be confirmed only if the pair closes today above the previous day’s high of 1.1620.
A move above 1.1620 could be seen if the treasury yields retreat from the three-week highs clocked yesterday and the Eurozone retail sales, due at 9.30 GMT, beat estimates. However, if the 10-yea treasury yield continues to rise, then the EUR/USD could come under pressure. Add to that, an uptick in the Italy-German yield spread and the re-test of the previous day’s low looks possible.
EUR/USD Technical Levels
Resistance: 1.1620 (previous day’s high), 1.17 (zero figure), 1.1733 (recent high)
Support: 1.1577 (session low), 1.1530 (yesterday’s low), 1.15 (psychological support)
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