EUR/USD bears target 1.0900 amid firmer yields, focus on NATO, EU/US data

• EUR/USD remains pressured for the second consecutive day, sidelined near daily low of late.
• Risk-aversion, firmer yields underpin USD strength ahead of a long day.
• EU/US Markit PMIs for March precede US Durable Goods Orders for February to decorate calendar.
• Biden’s visit to Brussels for NATO will be the key event as more Russian sanctions, Moscow-Beijing ties loom.

EUR/USD renews intraday low around 1.0980 during the early European morning on Thursday, extending the previous day’s losses amid sour sentiment.

The major currency pair’s latest weakness could be linked to the firmer US Treasury yields, which in turn joins the risk-off mood to underpin the US dollar strength.

That said, the US 10-year Treasury yields rise 1.5 basis points (bps) near 2.33% at the latest, following a pullback from a three-year high on Wednesday. Firmer US Treasury yields favor the US Dollar Index (DXY) bulls to eye the 99.00 threshold at the latest.

It’s worth noting that hawkish Fedspeak has been the key reason for the latest bond rout that propelled yields and favor the greenback buyers. The talks over 50 basis points (bps) of a Fed rate-lift and Quantitative Tightening (QT) in May were recently backed by St Louis Fed President James Bullard and Cleveland Fed President Loretta Mester.

Elsewhere, the UK and the US readiness to send more help to Ukraine, despite Russian handling of a list of diplomats termed as ‘persona non grata’ to the US embassy, weigh on market sentiment and favor the USD. Recently, US Senator John Cornyn said he met with US Treasury Secretary Janet Yellen to discuss Russian gold sanctions, which in turn flags risk-off mood ahead of President Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies in Europe. Russian President Vladimir Putin’s readiness to ask for oil payment in ruble to ‘unfriendly’ nations and covid woes in China, as well as Europe, also challenges the mood.

Amid these plays, stock futures remain directionless after Wall Street snapped the six-day winning streak.

Although the risk-aversion wave may keep weighing on the EUR/USD prices, moves of the yields will be crucial to follow for clear directions. Forecasts suggest that the US Markit Manufacturing PMI may weaken to 56.3 from 57.3 previous readouts whereas the Services PMI seemed to have dropped to 56.0 in March, from 56.5. Further, the US Durable Goods Orders growth for February is likely turned negative with -0.5% forecasts versus 1.6% prior.

Read: Durable Goods Orders Preview: Upside surprise set to trigger next leg up in the dollar

Technical analysis

The EUR/USD pair’s sustained weakness below the 21-DMA and a downward sloping resistance line from early February, as well as the 13-day-old previous support line, joins sluggish RSI to keep sellers hopeful to aim for short-term horizontal support near 1.0900.

On the flip side, the 21-DMA and a six-week-long descending trend line, respectively around 1.1035 and 1.1045, will challenge the quote’s further rebound. Also important will be the support-turned-resistance line from March 07 near 1.1050.