EUR/USD drops below 5-DMA as T-yields rebound ahead of Trump
Having failed once again just below 1.07 handle, the EUR/USD pair came under fresh selling pressure over the last hours, now sending the rate closer towards 10-DMA located at 1.0630.
EUR/USD: Rejected near 1.0700
Currently, the spot now drops -0.18% to fresh session lows of 1.0642, losing sight of 1.07 handle. Renewed expectations of higher inflation in Trump’s presidency, refueled demand for the US treasury yields, which provided the much-needed boost to the greenback at the expense of the common currency.
Markets are once again pricing-in pro-fiscal stimulus talks from the US President-elect Trump at his inauguration speech, as he takes office as the 45th US President later on Friday. However, if Trump fails to touch upon his campaign promises, "The US dollar’s correction lower could extend further if more protectionist trade policies garner the most attention in the near-term. The market will also be wary for any further potential comments regarding the strength of the US dollar,” analysts at MUFG noted.
EUR/USD Technical Levels
In terms of technicals, the pair finds the immediate resistance 1.0719 (multi-week high). A break beyond the last, doors will open for a test of 1.0746 (Nov 17 high) and from there to 1.0764 (100-DMA). On the flip side, the immediate support is placed at 1.0630 (10-DMA) below which 1.0600 (zero figure) and 1.0571 (20-DMA) could be tested.