- EUR/USD fell to a 17-day low of 1.1770 on Monday.
- Falling US Treasury bond yields cap's USD's gains.
- Focus shifts to August CPI data from the US.
The EUR/USD pair snapped a two-week winning streak last week and remained under modest pressure on Monday. After dropping to its lowest level since August 27 at 1.1770, however, the pair managed to erase its daily losses to end the day little changed around 1.1800.
In the absence of high-tier macroeconomic data releases and fundamental developments, the USD's market valuation continued to drive EUR/USD's movements. The cautious market mood at the start of the week helped the greenback outperform its rivals and the US Dollar Index (DXY) reached its strongest level in more than two weeks at 92.88.
In the second half of the day, the sharp decline witnessed in the US Treasury bond yields forced the DXY to turn south and helped EUR/USD retrace its daily decline.
In the meantime, European Central Bank Executive Board member Isabel Schnabel said that inflation in the euro is expected to ease noticeably next year. Nevertheless, this remark failed to help the shared currency gather strength against its rivals.
The European economic docket won't be featuring any high-,impact data on Tuesday. In the early American session, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for August. Investors expect the Core CPI to edge lower to 4.2% in August from 4.3% in July. A higher-than-expected reading could revive expectations for the Fed to start asset tapering before the end of the year and provide a boost to the dollar.
EUR/USD short-term technical outlook
Despite the recovery witnessed during the American trading hours, the slightly bearish technical outlook remains intact in the near term. The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50 and the rebound seems to have failed to lift the price back above the 100-period SMA. A daily close above 1.1850 is needed for buyers to retake control of the pair's action. On the flip side, additional losses are likely in case the pair stays below 1.1800.
Support levels: 1.1770 1.1725 1.1700
Resistance levels: 1.1815 1.1850 1.1910
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