EUR/USD: There is room for more declines towards the 1.1950 mark

EUR/USD has been under growing pressure as Fed's reluctance to tackle yields boosts the dollar while ECB's efforts to curb rises in long-term returns on Europe's covid struggles weigh on the euro. The 1.1950 level is eyed, Yohay Elam, an Analyst at FXStreet, reports.

See: EUR/USD to strengthen with vaccine rollout in the second quarter – CIBC

Key quotes

“The Federal Reserve sees the increase in returns on long-term US debt as a sign of stronger growth prospects. According to Thomas Barkin, President of the Richmond branch of the Fed, the greater worry for the world's most powerful central bank is that ten million Americans are out of work.”

“The European Central Bank is increasingly worried about the increase in yields on sovereign bonds in the old continent. ECB Vice-President Luis de Guindos is the latest to say that the Frankfurt-based institution is ready to act if the sell-off hurts financial conditions. If returns on US debt are higher than those in Europe, there is room for more EUR/USD declines.” 

“The Relative Strength Index on the 4-hour chart is nearing 30 – close to entering oversold territory. That implies a temporary rise is on the cards – a dead-cat bounce. In the bigger scheme of things, there is more room to the downside as momentum leans lower and the pair crashed below the 50, 100 and 200 Simple Moving Averages.” 

“Support awaits at the daily low of 1.1990, followed by the 2021 trough of 1.1950. Further down, 1.1930 and 1.1880 await the currency pair.” 

“Resistance is at 1.2020, a swing low which was seen in mid-February, followed by 1.2055 and 1.2080.”