EUR/USD dribbles near 1.0900 even as yields rally on Fed v/s ECB chatters

• EUR/USD holds lower grounds near intraday low, indecisive after two-day downtrend.
• ECB’s Villeroy raise doubts on gap between the end of the bond-buying and higher rates.
• US 5-year Treasury yields track all-time high inflation expectations to refresh record top, DXY rises too.
• Doubts over Russia-Ukraine peace, fresh covid fears from China adds to the US dollar’s safe-haven demand.

EUR/USD struggles for clear directions as the ECB versus the Fed battle intensifies. Also challenging the major pair traders are the mixed concerns over the Russia-Ukraine issues and fresh covid woes from China. That said, the quote recently picked up bids to 1.0915 heading into Monday’s European session.

Although the European Central Bank (ECB) did hint at a rate-hike following that recently escalating tapering, French central bank governor Francois Villeroy de Galhau mentioned, “There’s no automatism between the end of the bond-buying and higher rates.”

On the other hand, the US 5-year Treasury bond yields renew all-time high above 2.0% amid record inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data. That said, the US Dollar Index (DXY) tracks firmer yields to the north while printing a three-day uptrend around 99.16.

Also fueling the US dollar is the market’s lack of confirmation over the recently positive Ukraine-Russia peace talks, as well as a surge in China’s COVID-19 infections to early pandemic days.

It’s worth noting that downbeat prints of the Michigan Consumer Sentiment for March, down 3.1 points to 59.7, tests the US dollar bulls ahead of the European session.

Moving on, market players will keep their eyes on Wednesday’s key Federal Open Market Committee (FOMC). As per the latest readings from CME’s FedWatch Tool, there are 94% probabilities that the Fed will announce a 0.50% rate hike, which in turn keeps EUR/USD sellers hopeful.

Other than the Fed-linked chatters, grim headlines from Ukraine and worsening virus woes in China may also weigh on the EUR/USD prices. Though, a major of major data/events on Monday could join mixed concerns over the Moscow-Kyiv ceasefire to restrict immediate moves.

Technical analysis

EUR/USD bears stay on the way to multiple supports around 1.0850 unless rising back beyond the 1.0980 support-turned-resistance confluence, including 50-SMA and one-week-old ascending trend line.