Comment: EUR/USD falls to 2-month low as yields enhance dollar rebound

USU Ventures AG

04/02/2021 16:14

Feb 4 (Reuters) - EUR/USD fell to two-month lows on Thursday, threatening to
break below a slew of technical supports and option barriers in the 1.1950/75
range with downside risks growing as rising U.S. yields enhance the dollar's
allure.
     Technicals highlight EUR/USD's downside risks. The 50% Fibo of
1.1602-1.2349 has been pierced, daily and monthly RSIs imply bearish momentum
remains and the pair trades below the bearishly aligned 10- and 21-DMAs.
    The daily cloud base and 1.1950 barrier are impediments for bears but look
set to break. Supports near 1.1880/85 and 1.1835/45 are in play.
    U.S. 10-year bond yields  US10YT=RR  are rising again after a brief
correction lower and are close to testing January's 1.187% high. Should that
high break investors are likely to enter dollar positions as yields become more
attractive.
    EUR/USD faces downside risks from U.S. inflation expectations. The
5-year/5-year inflation linked swap  USIL5YF5Y=RR  rallied to 28-month highs as
it nears 2.43%. The rise could raise investor doubts about the Fed's
accommodative policy and pledge to keep rates lower for longer. U.S. equity
markets  .SPX  also remain buoyant. 
    For more click on  FXBUZ 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
eur/usd    https://tmsnrt.rs/2YLd8Og
USDINF    https://tmsnrt.rs/3jgN7Qp
US10YT    https://tmsnrt.rs/3jtg241
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 (Christopher Romano is a Reuters market analyst. The views expressed are his
own)
 ((christopher.romano@thomsonreuters.com;))