EUR/USD falls back towards the lows for the day at 1.1864 now
The bounce at the start of the week continues to stall for EUR/USD as buyers are finding it tough to negotiate a breakthrough above the 200-day moving average (blue line).
That level is seen @ 1.1882 currently and though the high today hit 1.1893, the daily closing level is the one to watch in gauging whether or not the level can be broken.
So, what’s next for the pair?
There’s still two sides to the equation here. For the euro, there’s still a lack of conviction to settle higher as the move in the past week looks to be more of a retracement/correction – even in the likes of EUR/GBP as well.
And you can’t really fault market participants for that since relying on EU lawmakers to deliver on any promise has never been a remotely convincing.
As for the dollar, it is also stalling as Treasury yields retreated upon touching its short-term ceiling at 1.75% post-non-farm payrolls.
That sees yields linger lower at 1.65% today but any real shove lower in yields may also be tough to come by considering more robust US data and the Fed still giving the green light, as reminded by yesterday’s FOMC meeting minutes release.
As such, barring any major capitulation in yields i.e. a reversal rally in Treasuries, the dollar may still find some reprieve eventually and that could cap gains in EUR/USD during Q2 at least until the EU gets its act together on the vaccine rollout.