EUR/USD Remains Under Pressure At The Start Of The Week

Key Insights

• U.S. dollar is trying to gain more ground as Treasury yields move higher. 
• Geopolitical developments will likely remain the key driver for currency markets this week. 
• A move below 1.0900 will push EUR/USD towards the support level at 1.0885.

Euro Is Losing Ground Against U.S. Dollar

EUR/USD continues its attempts to settle below the support at 1.0900, while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index is currently stuck near the resistance level at 99.20. If the U.S. Dollar Index manages to settle above 99.20, it will head towards the resistance at 99.45, which will be bearish for EUR/USD.

Today, foreign exchange market traders will likely focus on geopolitical developments and the dynamics of U.S. government bond markets. Treasury yields continue to move higher as traders focus on the threat of higher inflation due to the recent events in commodity markets.

The yield of 2-year Treasuries has already managed to get to the 1.80% level, while the yield of 10-year Treasuries has firmly settled above the 2.00% level. In case the current upside trend in Treasury yields stays strong, the U.S. dollar may get more support.

Technical Analysis

EUR/USD is currently trading in the range between the support at 1.0900 and the resistance at 1.0930. In case EUR/USD manages to settle below the support at 1.0900, it will gain additional downside momentum and head towards the next support level at 1.0885.

A move below the support at 1.0885 will open the way to the test of the support at 1.0865. If EUR/USD declines below this level, it will head towards the next support at 1.0850.

On the upside, a move above the resistance at 1.0930 will push EUR/USD towards the resistance level at 1.0960. If EUR/USD manages to settle above this level, it will head towards the resistance at 1.1000. A successful test of the resistance at 1.1000 will push EUR/USD towards the next resistance level, which is located at 1.1035.

For a look at all of today’s economic events, check out our economic calendar.