EUR/USD - Uptrend on hold amid rising T-yields
|- EUR/USD rally stalls in 1.2160-1.2320 range.
- Upside capped by fears Draghi would tame ECB hawks.
- USD fails to catch a bid despite rising T-yields.
- Fears of US government shutdown.
The latest leg higher in the EUR/USD (from Jan. 9 low of 1.1915) seems to have run out of steam as the bulls struggle this week to take out 1.23 levels in a convincing manner.
The spot clocked a three-year high of 1.2323 on Wednesday, before falling back to 1.2165 levels. As of writing, the pair is trading at 1.2245 levels.
Draghi likely to tame hawks at ECB
The upside is being capped reportedly due to fears that ECB's Draghi would convey a dovish message next week. Also, the recent ECB rhetoric was directed at the pace of EUR's ascent, forcing investors to question whether they have run ahead of themselves.
US 10-year yield clocks 13-month high
The US treasury bond yields, which are normally highly correlated with Dollar, have decoupled and risen without the US Dollar. However, the USD may find bids as the 10-year yield rose today above 2.63 percent; its highest level December 2014.
Focus on US government funding bill
The US House of Representatives passed a bill to fund government operations through Feb. 16. Now it heads to the Senate, where it faces an uncertain future. The resulting uncertainty could overshadow rising Treasury yields and keep USD bulls at bay.
EUR/USD Technical Levels
FXStreet Chief Analyst Valeria Bednarik writes, " An acceleration upward through 1.2280 should lean the scale towards the upside and favor a re-test of the 1.2322 high, while beyond this last, the rally can continue up to 1.2350. Below 1.2200, lower lows are likely, but bulls are still willing to add on dips."
Support levels: 1.2200 1.2165 1.2130
Resistance levels: 1.2280 1.2320 1.2350
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