EUR/USD: Bulls take a breather below 200-DMA, FOMC minutes eyed
|- EUR/USD stalls the upside below 200-DMA once again.
- US dollar selling pauses amid stabilizing Treasury yields.
- All eyes remain on the dollar dynamics and the FOMC minutes.
Having faced rejection once again below the 200-DMA at 1.1890, EUR/USD is easing towards 1.1850, as the bulls look to gather strength before the next push higher.
A pause in the US dollar sell-off amid stabilizing Treasury yields seems to cap the corrective pullback in the main currency pair to ten-day highs of 1.1878 reached earlier in the Asian session.
Heading into the key event risk from this week, the FOMC March meeting’s minutes, investors re-price the Fed rate hike expectations, triggered by the recent series of encouraging US fundamentals.
This led to the sell-off in the Treasury yields across the curve, which accelerated profit-taking in the US dollar, having reached four-month highs against its main competitors last week.
Meanwhile, nothing in terms of economic news or covid conditions justifies the latest upswing in the euro. “The euro’s gain can be put down to a pause in dollar short-covering that allowed a move to form a small bandwagon. Given the expectation of the US surpassing the eurozone in just about everything—job recovery, GDP, vaccinations, early taper—can we really expect the euro to match and surpass the previous high?,” explains Barbara Rockefeller at Rockefeller Treasury Services, Inc.
All eyes remain on the FOMC minutes for any hints on the Fed’s take on the inflation outlook and the forward guidance. In the meantime, the Euro area final Services PMI and US trade balance will entertain the traders. The pair will also remain at the mercy of the dynamics in the US dollar and yields.
EUR/USD: Technical levels
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