EUR/USD steadies above 1.2100 and retreating Treasury yields

EUR/USD is wavering in a narrow range above 1.2100, consolidating the recent recovery from monthly lows ahead of the key US consumer data. The US Treasury yields retreat, as the Fed commences its two-day monetary policy meeting.

The US rates retrace a part of Monday’s recovery rally, as investors turn cautious and refrain from higher-yielding assets, in absence of any clarity on the FOMC’s next policy move. The benchmark 10-year yields drop back below $1.50 level, now trading at $1.482, down 1.15% so far this Tuesday.

Inflation concerns continue to linger, although the Fed continues to downplay them. Meanwhile, robust economic recovery brings the central bank’s tapering debate back to the fore. Therefore, markets bide time and avoid placing any directional bets on the major ahead of Wednesday policy decision from the world’s top central bank.

Across the Atlantic, the optimism around the upbeat Eurozone Industrial Production figures was offset by a slew of dovish ECB-speak. The policymakers echoed that it's too early to talk about the end of the Pandemic Emergency Purchase Programme (PEPP).

Later today, the pair will look forward to another round of ECB-speak ahead of the US Retail Sales and Producer Price Index (PPI) data, with all eyes on Wednesday’s FOMC outcome and Chair Jerome Powell’s press conference for the next direction.

EUR/USD technical levels to watch