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EUR / USD pair declines amid rising US Treasury yields

At the beginning of the European trading session, the EUR / USD currency pair continued to move down against the backdrop of a recovery in the dollar. The dollar index has risen more than 0.4% since the beginning of the day.

The rapid recovery in the dollar exchange rate is due to the strong growth in the yield of American Treasuries. On Thursday, the yield on 10-year government bonds renewed their annual high and tested the 1.614% level. Today the yield is down to 1.5% but remains relatively high. Against this background, investor interest in risky assets dropped sharply. Active sales began on the stock markets. Many currencies also came under pressure. Currently, only the traditional safe-haven currencies, the Japanese yen (+ 0.08%) and the Swiss franc (+ 0.05%), show positive dynamics against the dollar.

Additional pressure on the European currency could have come from the data on consumer spending in France for January published today. The level of spending in January fell by 4.6%. Experts had expected a more modest decline of 3.5%.

Earlier, ECB Deputy Head De Guindos said that despite the positive signals, the EU economy continues to experience difficulties and recovery in the first half of this year is likely to be below forecasts.

In the US today, the focus will be on the data on the price index of personal consumption expenditure. Against the background of the rapid growth in the yield of US Treasuries, these data may have a strong local impact on trading.

On the chart, the currency pair found support at 1.2130. From the current levels, we can expect the development of a moderate pullback movement with the nearest target at the level of 1.2190.

  • Resistance levels: 1.2190, 1.2235, 1.2275.
  • Support levels: 1.2130, 1.2090, 1.2030.

The main scenario is an increase to 1.2190.

Alternative scenario - consolidation below 1.2130 and a decline to 1.2090.

The current fundamental background is moderately negative. We are considering buying from the level 1.2140.

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