EUR/USD Forecast: Under pressure amid rising yields

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1870

German Industrial Production contracted by 2.5% in January.
US Treasury yields resume their advance and flirt with one-year highs.
EUR/USD is bearish in the near-term despite oversold conditions.

The EUR/USD pair reached fresh 2021 lows in the 1.1850 price zone during London trading hours, as the American dollar keeps strengthening on the back of rising government bond yields. Over the weekend, the US Senate passed President Joe Biden’s stimulus bill with some changes, and it has now moved back to the House, where a vote is expected on Tuesday. The news adds support to the greenback and maintains equities afloat.

Nevertheless, the greenback’s strength comes from US Treasury yields, which resume their advances this Monday, and flirt with one-year highs ahead of Wall Street’s opening. Germany published January Industrial Production, which fell 2-5% MoM, missing the market’s expectations. The annual reading met expectations by printing at 3.6%. The EU Sentix Investor Confidence improved to 5 in March from -0.2 previously, well above expected. The US calendar will only offer January Wholesales Inventories, foreseen at 1.3%.

EUR/USD short-term technical outlook

The EUR/USD pair pressures daily lows and seems poised to extend its slump. The pair has broken below the 61.8% retracement of its November/January rally at 1.1885, the immediate resistance level. In the 4-hour chart, technical indicators resumed their declines, despite being in oversold readings, while the 20 SMA heads sharply lower, now nearing the 50% retracement of the mentioned rally at 1.1970. The next support comes at 1.1840, with a break below it favoring an extension towards 1.1790, the next relevant support level.

Support levels: 1.1840 1.1790 1.1750

Resistance levels: 1.1885 1.1920 1.1960

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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