EUR/USD tracks German yields lower, eyes 1.1550 ahead of Draghi

The EUR/USD pair stalled its steady recovery mode near 1.1620 and came under renewed selling pressure in Europe, with the bears now pushing the rates further away from the 1.16 handle.

The offered tone around the common currency keeps growing bigger, as the sell-off in the German 10-year yields gather pace amid risk-aversion spilled over into the European equities. Risk-off sentiment intensified amid escalating US-Sino trade angst after Trump threatened to impose additional tariffs of USD 200 billion on the Chinese goods. Meanwhile, the German 10-year yields hit fresh three-week lows of 0.350%, down 11.50% or 5 bps on the day.

Preview: Draghi’s speech at ECB Forum in Sintra

More so, markets resort to clearing out their EUR positions heading into the ECB President Draghi’s speech at the ECB Forum in Sintra, which can be partly attributed to the selling seen in the EUR/USD pair.

EUR/USD Technical Levels

Haresh Menghani, FXStreet’s Analyst offers the key technical levels for the main currency pair: “From a technical perspective, the pair has found acceptance above 23.6% Fibonacci retracement level of its post-ECB slump but any subsequent up-move seems more likely to be capped near the 1.1650-60 confluence region, comprising of 38.2% Fibonacci retracement level and 100-hour SMA.  On the flip side, the 1.1610-1.1600 region now seems to protect the immediate downside, which if broken might accelerate the fall back towards 1.1570 horizontal support. A follow-through weakness might turn the pair vulnerable to head back towards retesting the key 1.1500 psychological mark, or 10-month lows set on May 29th.”