EUR/USD stays depressed near 1.2050 amid firmer yields, ahead of Powell

• EUR/USD remains on the backfoot, as DXY rises with Treasury yields.
• Concerns about the pace of the yields surge dent the risk appetite.
• Focus on EZ retail sales and US data ahead of Fed Chair Powell’s speech.

EUR/USD is on the defensive around mid-1.2000, undermined by resurgent demand for the US Treasury yields, which keeps the US dollar broadly bid.

Expectations of faster US economic recovery were bolstered by Chicago Fed Chief Charles Evan after he said that higher yields point to economic optimism. His comments sent the yields higher once again, as the bond bears returned to the fore.  

The market mood remains tepid amid reflation risks, as investors remain wary about the pace of the surge in global yields, underpinning the haven demand for the dollar at the euro’s expense.

Meanwhile, mixed Eurozone and German Final Services PMI reports failed to impress the EUR bulls, as the spot consolidates its retreat from weekly tops of 1.2113 so far this Thursday.

Next of note for the major remains the Eurozone Retail Sales and jobs data while the US jobless claims will be also closely eyed after dismal ADP report. The main event risk for today remains the Fed Chair Jerome Powell’s speech for any hints on the policy front, given the rise in the Treasury yields.

EUR/USD: Technical levels

“Bearish traders might wait for some follow-through selling below the key 1.2000 psychological mark before placing fresh bets. The pair might then turn vulnerable to challenge YTD lows, around the 1.1955-50 region and accelerate the slide further towards the next major support near the 1.1920-15 region. On the flip side, the 1.2090-1.2100 region might continue to act as immediate strong resistance,” Haresh Menghani, FXStreet’s Analyst explains.

EUR/USD: Additional levels