Licks wounds below 21-DMA, focus on yields, US data
- EUR/USD drops back below 21-DMA as US Treasury yields hold the advance.
- The pair remains within an ascending triangle formation on the daily chart.
- RSI stays bearish, a test of 1.1260 appears inevitable, with eyes on the US data.
EUR/USD is pressurizing daily lows below 1.1300, as the bears are fighting back control after a brief breather in the Asian trades.
The US Treasury yields remain at higher levels, keeping the dollar underpinned while maintaining the bearish pressure intact on the major.
Rising coronavirus cases globally combined with the hawkish Fed’s expectations continue to keep the sentiment lifted around the yields worldwide.
Traders now await the US ISM Manufacturing PMI for fresh trading impetus, especially after the German Final Markit Manufacturing PMI failed to impress EUR bulls.
Looking at EUR/USD’s daily chart, the price is extending its range within a month-long ascending triangle formation.
Essentially, the pair has been pivoting around the 21-Daily Moving Average (DMA) over the past month, unable to find the recovery momentum above the latter. The 21-DMA now stands at 1.1307.
Daily closing below the latter will expose the rising trendline support at 1.1260. A failure to resist above that level will confirm a triangle breakdown, opening up the downside towards the 2021 lows of 1.1186.
The 14-day Relative Strength Index (RSI) is inching lower below the midline, suggesting that the downside bias remains intact.
EUR/USD: Daily chart
On the flip side, recapturing 21-DMA support-turned-resistance will reinforce the bullish interests.
A fresh advance towards the bearish 50-DMA at 1.1369 will be in the offing should the recovery momentum pick up pace.
The next critical resistance is pegged at the horizontal triangle resistance at 1.1388.
EUR/USD: Additional levels to consider