EUR/USD Forecast: yields lead the way, bears in control
- US Treasury yields keep rallying, 10-year note benchmark reaches 3.03%.
- Dollar's rally doesn't have a solid background, further gains in doubt.
The American dollar retook the market´s lead and advances against all of its major rivals, as the financial word continues gyrating around bond yields. The yield for the 10-year US Treasury hit 3.03%, dragging equities lower worldwide, in the absence of other catalysts, as Australian and New Zealand markets were closed amid a local holiday, while the macroeconomic is quite scarce today.
The EUR/USD pair struggles with the 1.2200 figure after hitting 1.2244 late Tuesday, meeting sellers around the daily ascendant trend line coming from mid-February, broken at the beginning of the week. The line was the base of a symmetrical triangle, which has now been invalidated. This week, the pair also broke below the 100 DMA for the first time since last December, another usual sign of a surging bearish trend. However, a longer-term downward extension is not that clear yet, as the pair has been confined to a 60 pips' range ever since breaking lower, and this sudden love for the greenback doesn't have a solid base. Indeed, data have been indicating solid growth, lifting hopes for a fourth Fed's rate hike this year, and political jitters seem to have receded, but none of both is a fact.
Anyway, and in the short term, the 4 hours chart shows that the 20 SMA continues heading south above the current level, crossing now below the broken trend line and around 1.2240, while after correcting extreme oversold conditions, technical indicators resumed their declines. The weekly low at 1.2181 is an intermediate support, with a stronger one around 1.2160. If this last gives up, 1.2100 comes at sight, while a break of this last is what it takes for a steeper, more lasting bearish move. Resistances come at 1.2245, the 1.2270 region, and the 1.2300 figure, although gains up to this last seem quite unlikely.
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.
