EUR/USD Price Analysis: Breaches critical daily support line amid rallying Treasury yields


  • EUR/USD extends a three-day downtrend amid a relentless rise in US yields.
  • Fed’s hawkish shift and optimism on the economy, lift yields with the USD.
  • Impending bear cross points to a breach of the critical support at 1.1683.

EUR/USD is falling for the third day in a row, pressuring the pivot support near 1.1683, as the bears remain relentless amid the ongoing rally in the US Treasury yields.

The Fed’s hawkish shift last week combined with the central bank’s policymakers calling for tapering sooner-than-expected boosts the yields alongside the US dollar. The benchmark 10-year Treasury yields jumped to 1.52% at the highest levels seen since June 28.

Meanwhile, ECB President Christine Lagarde left doors open for higher inflation while adding that there is "every reason to believe" that the rebound in energy prices and supply bottlenecks would ease next year.

In the day ahead, the main currency pair will remain at the mercy of the dynamics in the yields and the dollar, as investors await Lagarde and Powell to grab the spotlight for the second straight day on Tuesday.

Looking at EUR/USD’s daily chart, the price is testing the critical rising trendline support at 1.1683, with a daily candlestick closing below the latter needed to validate a downside breakout.

Immediate support is seen at 1.1664, the August lows, below which the 1.1650 psychological level will come into play. Further south, the 1.1600 level could challenge the bullish commitments.

The Relative Strength Index (RSI) is pointing south below the midline, backing the case for additional weakness in the spot.

EUR/USD: Daily chart

Alternatively, recapturing the 1.1700 level is critical to initiate a tepid recovery towards the range highs around 1.1750.

But an impending bear cross on the said time frame, suggesting that investors should resort to a ‘sell the bounce’ strategy amid the recent downside momentum.

The 21-Daily Moving Average (DMA) is on the verge of cutting the 50-DMA from above, flashing a bearish signal.

EUR/USD: Additional levels to consider

EUR/USD

Overview
Today last price 1.1682
Today Daily Change -0.0013
Today Daily Change % -0.11
Today daily open 1.1696
 
Trends
Daily SMA20 1.179
Daily SMA50 1.1784
Daily SMA100 1.1905
Daily SMA200 1.1977
 
Levels
Previous Daily High 1.1727
Previous Daily Low 1.1685
Previous Weekly High 1.1756
Previous Weekly Low 1.1684
Previous Monthly High 1.19
Previous Monthly Low 1.1664
Daily Fibonacci 38.2% 1.1701
Daily Fibonacci 61.8% 1.1711
Daily Pivot Point S1 1.1678
Daily Pivot Point S2 1.1661
Daily Pivot Point S3 1.1636
Daily Pivot Point R1 1.172
Daily Pivot Point R2 1.1744
Daily Pivot Point R3 1.1762

 

 

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