• EUR/USD has turned lower as US yields resume their gains.
  • American inflation figures and a critical Treasury auction are set to dominate trading.
  • Wednesday's four-hour chart is pointing to additional falls.

Turnaround Tuesday? That is over now, as EUR/USD performed one of its typical dead-cat bounces and is heading to new lows. US ten-year bond yields have resumed their gains on Wednesday, allowing the dollar to gain fresh ground – and more may be in store. 

That relief rally in Wall Street was partially triggered by Chinese authorities' intervention to shore up stocks on Tuesday – a feat that did not repeat itself on Wednesday. The more cautious mood is now favoring the safe-haven dollar as tensions mount ahead of Wednesday's heavyweight events. 

First, Consumer Price Index figures for February are set to show a pick up in inflation, especially in headline prices fueled by rising oil prices. While Core CPI has likely remained in check last month, any tick to the upside may carry the greenback higher.

US CPI February Preview: A perfect storm in the making?

The more significant event in America's auction of new ten-year Treasuries. Investors have been glued to this global benchmark as a guide for the next moves. Tuesday's three-year offering was smooth, resulting in robust demand and pushing returns lower. However, demand for longer-term debt may be different. 

At the time of writing, the ten-year yield is hovering around 1.54%, above the lows but below 1.60% which causes stocks to shiver. If investors seize on the new issuance of debt, yields could slip toward 1.50% and allow EUR/USD to resume its recovery. However, there are greater chances that the ten-year auction follows the recent seven-year one – resulting in weak demand, higher returns, and a consequent surge in the dollar. 

US 10-Year Treasury Auction: Interest rates return to center stage

The bond auction is due at around 18:00 GMT, around the time that the US House of Representatives is set to approve the Senate's version of the covid relief package. President Joe Biden will likely sign the bill into law shortly afterward, unleashing $1.9 trillion in stimulus funds. The plan has been one of the upside triggers for yields and the dollar, but its passage is fully priced in.

The old continent continues struggling with coronavirus, with Italy bearing the brunt of the recent uptick in cases. Europe's vaccination schemes remain sluggish, especially in comparison to America's accelerated drive. Alaska has become the first state to offer jabs to anyone aged 16 or more. 

All in all, the currency pair's downside correction may be on the verge of ending, with new lows in sight.

EUR/USD Technical Analysis

Euro/dollar is suffering from downside momentum on the four-hour chart and trades below the 50, 100 and 200 Simple Moving Averages. Moreover, the Relative Strength Index has risen above the 30 level – exiting oversold conditions. 

Bears are in full control. 

Support awaits at the daily low of 1.1868, followed by the 2021 trough of 1.1836. A weak cushion awaits at 1.1815, with stronger support at 1.18 – a psychologically significant level, followed by 1.1750. All were in play in late 2020. 

Some resistance is at the daily high of 1.1902, followed by 1.1915, Tuesday's high point. It is followed by 1.1950 and 1.1990. 

EUR/USD Price Forecast 2021: Euro-dollar long-term bullish breakout points to 1.2750

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD falls below 1.0500 after US NFP data

EUR/USD falls below 1.0500 after US NFP data

EUR/USD dropped below 1.0450 but managed to stage a modest rebound. The US Dollar preserves its strength against its rivals and doesn't allow the pair to gain traction after the data from the US showed that Nonfarm Payrolls rose by 263,000 in November.


GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD lost nearly 100 pips with the immediate reaction to the upbeat November jobs report from the US and broke below 1.2200. The US Dollar Index clings to strong daily gains above 105.00 after the data showed that Nonfarm Payrolls rose by 263,000.


Gold retreats below $1,790 as US yields surge on US NFP

Gold retreats below $1,790 as US yields surge on US NFP

Gold price turned south and dropped below $1,790 in the early American session. The benchmark 10-year US Treasury bond yield is up more than 2% on the day near 3.6% after the bigger-than-expected November job growth, weighing heavily on XAU/USD.

Gold News

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange, founded by Samuel Bankman-Fried (SBF), has consistently made headlines over the past month for its liquidity crisis and triggering a collapse in the crypto ecosystem.

Read more

AMC advances more than 3% in premarket day after being halted

AMC advances more than 3% in premarket day after being halted

AMC stock is up 3.4% in Friday's premarket just a day after authorities halted trading due to unusual volatility. Thursday saw options volume three times higher than the 20-day average.

Read more