EUR/USD attacks 1.1700 as US dollar extends higher with yields

EUR/USD is pressurizing lows just above the 1.1700 level, reaching the lowest levels since early November 2020, as the US dollar tracks the rally in the Treasury yields across the curve.

The US Treasury yields continue to head skywards, in anticipation of a likely $3+ trillion US infrastructure spending stimulus due to be unveiled by President Joe Biden later this Wednesday.

Expectations that the next leg of the US fiscal spending would boost the economic recovery, which drives the inflation expectations higher alongside the yields. The benchmark 10-year US rates rise nearly 1% to 1.745%, as of writing, having touched a 14-month high of 1.77% in the US last session.

On the other side of the Atlantic, the continuous rise in the covid cases and slower vaccination campaigns on supplies delays are likely to weigh on the Euro area's economic prospects. Therefore, the macroeconomic divergence between the US and the old continent continues to undermine the sentiment around the euro.

Meanwhile, investors ignore the upbeat mood, driven by encouraging Chinese Manufacturing and Services PMI reports, as the spot remains at the mercy of the dynamics in the greenback and returns on the market.

The pair now awaits the Eurozone CPI data and US ADP jobs report for some near-term trading opportunities ahead of the highly-anticipated Biden’s speech.

EUR/USD: Technical levels

“An eight-month-long horizontal area around 1.1700-1685 restricts the pair’s immediate downside ahead of the 61.8% Fibonacci retracement level and November 2020 bottom, respectively around 1.1620 and 1.1600. Meanwhile, a corrective pullback beyond 50% Fibonacci retracement level of 1.1758 will aim to regain the 1.1800 threshold,” Anil Panchal at FXStreet explains.

EUR/USD: Additional levels