EUR/USD Tests Support At 1.0960

Key Insights

• Rising Treasury yields provide material support to the U.S. dollar.
• Geopolitical uncertainty serves as an additional bearish catalyst for the euro.
• A successful test of the support at 1.0960 will open the way to the test of the next support level at 1.0930.

Euro Is Under Pressure Against U.S. Dollar

EUR/USD is currently trying to settle below the support at 1.0960, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance at 99.20. If this test is successful, the U.S. Dollar Index will move towards the next resistance at the yearly highs at 99.45, which will be bearish for EUR/USD.

Today, foreign exchange market traders will focus on the dynamics of U.S. government bond markets as Treasury yields are testing new highs. The yield of 2-year Treasuries has already managed to get above the 2.40% level, while the yield of 10-year Treasuries is trying to settle above 2.50%.

Short-term yields have been rising fast in recent days, and it looks that the inverted yield curve is just a question of time. The inverted yield curve is a situation when short-term Treasuries are yielding more than long-term Treasuries. This market phenomenon is often viewed as a reliable recession indicator, which may increase demand for the safe-haven U.S. dollar.

Technical Analysis

EUR/USD is testing the support level at 1.0960. In case EUR/USD manages to settle below this level, it will move towards the next support level at 1.0930.

A successful test of the support at 1.0930 will open the way to the test of the support at 1.0900. If EUR/USD declines below this level, it will head towards the next support level at 1.0885.

On the upside, EUR/USD needs to get back above 1.0960 to have a chance to develop upside momentum in the near term. The next resistance level for EUR/USD is located at 1.1000.

In case EUR/USD gets above the resistance at 1.1000, it will head towards the 20 EMA at 1.1025. A successful test of this level will push EUR/USD towards the resistance at 1.1050.

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