EUR/USD under pressure as juicier US yields lift dollar

EUR/USD is flashing red on Wednesday with the American dollar drawing bids on resurgent treasury yields.

The pair is trading at 1.1722 at press time, representing a 0.15% decline on the day, having put in a 26-month high of 1.1916 on Aug. 6. 

US yields rise

The US yield, which rises when bond prices fall, jumped over six basis points to 0.66% on Tuesday to register its biggest single-day gain in two months. That put a bid under the oversold greenback. 

The yield remains near 0.66% at press time and could continue to rise in the USD-positive manner ahead of Wednesday’s record $38 billion bond auction. Fixed-income traders usually sell bonds, pushing yields higher when the supply of bonds is expected to increase. 

Apart from repositioning ahead of big debt issuance, the positive coronavirus vaccine news out of Russia and a general sense that the global recovery is looking broader and more robust could push US yields and the greenback higher. The optimism about the global economy is likely stemming from China’s producer price index (PPI) released Monday, which showed factory deflation eased for the second month in July. 

On the data front, the Eurozone Industrial Production for June is scheduled for release at 09:00 GMT, following which, the focus would shift to the US Consumer Price Index for July, due at 12:30 GMT. 

Technical levels

The immediate support is located at 1.1688 (20-day SMA), which if breached, would confirm a double top breakdown on the daily chart and open the doors to 1.1422 (June 10 high). Meanwhile, Tuesday’s high of 1.1808 is the level to beat for the bulls. #EUR/USD##FX##USDollarWeakness#

Reprinted from Fxstreet，the copyright all reserved by the original author.