EUR/USD fades part of the recent strong rebound to 1.1480
The single currency starts the new trading week on the defensive and drags EUR/USD back to the 1.1420 region. Fresh selling pressure around the European currency prompted EUR/USD to give away part of the recent advance to new YTD tops past 1.1480 (February 4), all amidst some mild recovery in the greenback. On the latter, further upside in US yields, particularly in the belly and the long end of the curve lends support to the demand for the buck while market participants continue to digest Friday’s strong print from US Nonfarm Payrolls (+467K). In the German money market, the selloff in bonds remains well and sound, lifting yields of the key 10y Bund to fresh highs near 0.24%.
EUR/USD now faces some downside pressure following recent peaks close to 1.1500 the figure. The optimism around spot seems threatened by the recovery in the greenback, which has particularly regained traction after US Nonfarm Payrolls surprised to the upside in January. The now improved outlook in the pair looks bolstered by prospects of a potential interest rate hike by the ECB at some point by year end, higher German yields, elevated inflation in the region and a decent pace of the rebound in the economic activity and other key fundamentals. So far, spot is retreating 0.22% at 1.1421 and faces the next up barrier at 1.1482 (2022 high Jan.14) followed by 1.1496 (200-week SMA) and finally 1.1673 (200-day SMA). On the other hand, a break below 1.1312 (55-day SMA) would target 1.1121 (2022 low Jan.28) en route to 1.1100 (round level).