EUR/USD attempts recovery above 1.1950 as US dollar bounce fizzles

EUR/USD is attempting a recovery above 1.1950 ahead of the European open, as the US dollar’s rebound falters amid persistent weakness in the Treasury yields.

The US dollar index staged an impressive bounce earlier on, as concerns over the rising covid infections worldwide and uncertainty around the US infrastructure spending plan unnerved the market.

However, the ongoing weakness in the US Treasury yields capped the advance in the greenback, as the dovish Fed expectations continue to play out.

The sentiment around the euro remains underpinned by expectations of a pick in the Euro area's economic recovery, as the bloc’s covid vaccine rollouts get into gear.

Encouraging German industrial activity reports and predictions that the bund yields will turn positive by December also offer support to the common currency.

Looking ahead, the European Central Bank (ECB) monetary policy decision, due later this week, will determine the next direction in the spot.

 In the meantime, the dynamics in the yields and the greenback alongside the vaccine updates will likely remain the key drivers for the major. The economic calendar on both sides of the Atlantic lacks the first-tier news, leaving EUR/USD at the hands of the dollar.

EUR/USD technical levels

FXStreet’s Chief Analyst Valeria Bednarik notes, “The 100 SMA provides dynamic resistance around 1.2060, while technical indicators advance within positive levels. In the near term, and according to the 4-hour chart, the risk is also skewed to the upside. A bullish 20 SMA provides support around 1.1970, while technical indicators lack directional strength but hold within positive levels.”

EUR/USD additional levels