EUR/USD recovers above 1.0850 on broad USD weakness

Sharp drop in US Treasury bond yield takes its toll on USD.
US Dollar Index drops to 96.20 area after opening with a bullish gap.
German IFO Business Climate Index improves modestly in February.

Eren Sengezer FXStreet

The EUR/USD started the new week under pressure with a bearish gap after the weekend reports showed a surge in confirmed coronavirus cases globally, especially in Italy and South Korea. According to Italian news agency ANSA, the number of confirmed cases in Italy currently stands at 229 with 7 fatalities.

After sliding toward the 1.0800 handle during the European session, however, the broad-based USD weakness in the second half of the day helped the pair close the opening gap and turn positive on the day. As of writing, the EUR/USD pair was up 0.15% on the day at 1.0860.

DXY turns south in American session

Although the USD was able to capitalize on risk aversion in the past few weeks, a sharp drop witnessed in the US Treasury bond yields seem to have finally triggered a heavy selloff. At the moment, the 10-year US Treasury bond yield is down 7.7% on the day at 1.359%. The US Dollar Index (DXY), which advanced to a daily high of 99.64 earlier, was last erasing 0.18% on the day at 99.15.

In the meantime, Monday's data showed that the headline German IFO Business Climate Index improved slightly to 96.1 from 96 in January 95.9 to beat the analysts' estimate of 95.3. Furthermore, the Expectations Index rose to 93.4 from 92.9 and the Current Assessment Index arrived at 98.9 to surpass the market expectation of 98.6.

On Tuesday, Gross Domestic Product (GDP) data for the fourth quarter from Germany will be looked upon for fresh catalysts. Investors will continue to keep a close eye on coronavirus headlines as well.

Technical levels to watch for

EUR/USD

Overview
Today last price	1.085
Today Daily Change	0.0000
Today Daily Change %	0.00
Today daily open	1.085

Trends
Daily SMA20	1.0933
Daily SMA50	1.105
Daily SMA100	1.1059
Daily SMA200	1.1106

Levels
Previous Daily High	1.0864
Previous Daily Low	1.0783
Previous Weekly High	1.0864
Previous Weekly Low	1.0778
Previous Monthly High	1.1225
Previous Monthly Low	1.0992
Daily Fibonacci 38.2%	1.0833
Daily Fibonacci 61.8%	1.0814
Daily Pivot Point S1	1.0801
Daily Pivot Point S2	1.0752
Daily Pivot Point S3	1.072
Daily Pivot Point R1	1.0881
Daily Pivot Point R2	1.0913
Daily Pivot Point R3	1.0962

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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