EUR/USD succumbs to pressure of rising treasury yields

Bid tone around USD gathered pace following a rise in treasury yields, courtesy of which Monday’s rebound proved to be short lived. EUR/USD is now trading lower on the day around 1.1170 levels.

Trades below 38.2% Fibo

The currency pair rose to 1.1192 levels before falling below 1.1181 (38.2% of 1.1616-1.0911) levels as the two-year treasury yield, which tracks short-term rate hike bets, erased early losses to trade at least one basis point higher on the day.

The common currency jumped to a high of 1.1208 levels yesterday as the two-year yield dropped by five basis points post release of the data which showed savings rate jumped in July for the first time since March.

EUR/USD Technical Levels

Acceptance above 1.1181 (38.2% of 1.1616-1.0911) could yield a test of 1.1219 (5-DMA + 100-DMA). A violation there would open doors for 1.1264 (50% of 1.1616-1.0911). On the other hand, breakdown of previous day’s low of 1.1158 (previous day’s low) would expose 1.1139 (50-DMA). Further losses could run into strong support of 1.1113 (200-DMA).