EUR/USD Forecast: Decline set to continue on yields’ strength

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2152

US Treasury yields hold at multi-month highs, pushing the dollar higher.
Hopes for additional fiscal stimulus provide support to the greenback.
EUR/USD is bearish in the near-term, the decline could accelerate below 1.2125.

The EUR/USD pair fell to 1.2146 this Monday, its lowest since December 21, as demand for the greenback persists. Following a terrible Nonfarm Payroll report, the market mood soured, yet at the same time, hopes for fresh stimulus rose. The dollar finds support in government debt yields, with as Treasuries yields stand at levels last seen in March 2020, retreating modestly from the multi-month highs clinched last week.

The EU published January Sentix Investor Confidence, which improved by more than anticipated from -2.7 to 1.3. ECB’s President Christine Lagarde is scheduled to speak later today. As for the US, the macroeconomic calendar includes some Fed’s speakers, not expected to provide fresh clues on monetary policy.

EUR/USD short-term technical outlook

The EUR/USD pair is pressuring daily lows ahead of Wall Street’s opening, bearish in the near-term. The 4-hour chart shows that the pair is below its 20 and 100 SMAs, with the shorter gaining bearish traction. Technical indicators hover near oversold readings partially losing their downward strength, but without signs of exhaustion. Further declines could be expected on a break below 1.2125, the immediate support.

Support levels: 1.2125 1.2080 1.2040

Resistance levels: 1.2165 1.2210 1.2250

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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