EUR/USD rebounds to 1.2270, tracks the rally in German yields
- Positive equities, DXY rally and dismal Euro-area services PMIs ignored?
- Benefits from the rally in German yields ahead of US data.
The EUR/USD pair is seen experiencing good two-way trading, having slumped to the 1.2250 support area following the releases of downbeat Euro-area services PMI reports.
From there, the bulls quickly regained footing and sent the rates back towards 1.2270 region, as the ongoing rally in the German 10-year bund yields led to the narrowing of the US-Germany yield differential that usually is seen as EUR supportive.
However, it remains to be seen if the spot can sustain the bounce, as broad-based US dollar strength combined with positive European equities are likely to keep a lid on the prices. Moreover, the renewed upside could also lose steam on mixed Eurozone PPI and retail sales data.
Looking ahead, the pair will continue to get influenced by the US-German yield spread and risk trends before the releases of the US trade and jobless claims data.
EUR/USD levels to watch
Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, notes, “the Euro holds in red in early European trading on Thursday and pressures Tuesday's low at 1.2253, following limited upside action in Asia (capped at 1.2290). Strong upside rejection on Wednesday, when upside attempts stalled just under 30 SMA which capped the action in past five days, maintains negative near-term tone. Also, Wednesday's close below 1.2277 (Fibo 61.8% of 1.2154/1.2476 ascend) was a negative signal. Near-term bears eye targets at 1.2240/30 (20/21 Mar higher base/Fibo 76.4%), to open the way towards key supports at 1.2154/45 (01 Mar trough/daily cloud base, reinforced by rising 100SMA).”