EUR/USD falls back to 1.19, reversing early gains

EUR/USD erases the early US stimulus-fueled gains as Treasury yields remain elevated.
The US-Eurozone growth divergence, oil rally could bode well for the greenback.

Omkar Godbole FXStreet Contributor

EUR/USD has retreated to 1.19, having printed a session high of 1.1932 in Asia. Elevated US Treasury yields helped the dollar erase early losses.

The pair opened the week on a positive note with the dollar nursing losses across the board in the wake of the US Senate's passage of President Joe Biden's $1.9 trillion fiscal stimulus plan. The bill now goes to House for clearance.

However, the US 10-year yield remained steady just shy of the 12-month high of 1.62%. As such, the dollar recovered losses, pushing EUR/USD lower.

The pair could drop further, as analysts expect yields to continue rising on stimulus progress. Besides, the greenback may find bids due to the oil rally. Reports of attacks on Saudi Arabian oil production facilities have powered Brent crude to the highest level since January 2020.

EUR/USD's downside will likely gather pace if the German Industrial Production and the Eurozone Sentix Investor Confidence disappoint expectations.

Bearish close

The pair closed below 1.1945 on Friday, marking a downside break of the 23.6% Fibonacci retracement of the rally from 1.0636 to 1.2349.

The bearish close happened as Friday's US jobs data bettered estimates, pointing to a relatively faster economic recovery than the Eurozone, which is facing delay in coronavirus vaccine rollouts and forced lockdowns.

Technical levels

EUR/USD

Overview
Today last price	1.1902
Today Daily Change	-0.0014
Today Daily Change %	-0.12
Today daily open	1.1916

Trends
Daily SMA20	1.209
Daily SMA50	1.2132
Daily SMA100	1.2039
Daily SMA200	1.1821

Levels
Previous Daily High	1.1978
Previous Daily Low	1.1893
Previous Weekly High	1.2113
Previous Weekly Low	1.1893
Previous Monthly High	1.2243
Previous Monthly Low	1.1952
Daily Fibonacci 38.2%	1.1926
Daily Fibonacci 61.8%	1.1946
Daily Pivot Point S1	1.188
Daily Pivot Point S2	1.1844
Daily Pivot Point S3	1.1796
Daily Pivot Point R1	1.1965
Daily Pivot Point R2	1.2014
Daily Pivot Point R3	1.205

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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