EUR/USD moves off lows near 1.1800 to keep around 1.1810-20 currently
The pair was in a precarious spot early last week as it threatened the 1.1700 level but buyers have since managed to turn things around, seizing near-term control upon pushing above the key hourly moving averages in trading yesterday.
Of note, the shove higher sees the pair trade to fresh highs in nearly two weeks but price action is being limited just above 1.1800 for now. The Monday high @ 1.1819 is helping to keep a lid on things though buyers are also defending the 1.1800 level.
The 38.2 retracement level @ 1.1813 also adds some element of resistance when looking at the daily close, with the 200-day moving average @ 1.1876 being the key level to watch in terms of any major shift in sentiment for the pair.
As such, unless buyers are able to chase such a break, the narrative and focus may yet stay on the fact that there is a divergence in fundamentals between the two currencies i.e. euro plagued by a slower recovery, dollar bolstered by a faster recovery.
For now though, the near-term technicals hint at a pause in the downside momentum but the risk levels above are so far helping to limit the potential for a major turn.
The next direction for the pair also hinges a lot on the next move in Treasury yields. For now, there is some push and pull to start the week with yields falling yesterday and earlier today to 1.677% before climbing back up to 1.708% currently.
As things stand, we might be seeing a short-term top closer to 1.75% in 10-year yields but any material breakdown is still seen largely contained closer to 1.60% – so that sort of provides some idea for the range we are playing around with, likewise for the dollar.