EUR/USD drops back to test 10-DMA as treasury yields rally

The EUR/USD failed another attempt to take-out stiff barrier placed at 1.0460, knocking-off the rate back to test yesterday’s low reached at 1.0438 levels, where 10-DMA support intersects.

EUR/USD: Heading towards 1.0400?

Currently, EUR/USD trades -0.14% lower at fresh session lows of 1.0438, having faced fresh offers at daily pivot of 1.0455. The main currency pair brought an end to its five-day winning streak and turned negative in the post-Christmas trades, as the investors continue to favor the reserve currency – USD against the backdrop of divergent monetary policy outlook between both continents.

While ongoing Italian banking woes, with the fragile state of the world’s oldest bank, Monte Dei Paschi, continue to weigh on the sentiment around the single currency. However, the latest leg lower in the major can be solely attributed to the renewed buying interest seen behind the US treasury yields, which pushes the US dollar higher across the board.

In the day ahead, trading is expected to remain light as some of the major markets continue to observe Christmas Day/ Boxing Day. Hence, the spot will remain at the mercy of the USD dynamics ahead of the release of the US macro news later in the NA session.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0459 (daily high). A break beyond the last, doors will open for a test of 1.0474 (daily R1) and from there to 1.0500 (round figure). On the flip side, the immediate support is placed at 1.0418 (dally S2) below which 1.0383 (Dec 21 low) and 1.0352 (yearly/ 14-yr lows) could be tested.