EUR/USD has bounced from the lows and is hovering around 1.2150 amid calmer markets. US yields remain elevated as the Fed mulls tapering bond buying. Coronavirus developments are eyed.
EUR/USD consolidates around 1.2150 this Tuesday, near the weekly low set at 1.2130 Demand for the greenback recedes as the market mood improves, although a caution stance persists. Equities struggle to post substantial gains, although US indexes are poised to open in the green. On the other hand, US Treasury yields keep advancing to fresh multi-month highs amid hopes for more fiscal stimulus.
The EUR/USD pair is at risk of extending its decline, according to intraday technical readings. Technical indicators remain within negative levels, lacking directional strength. Chances of a steeper decline will increase on a break below 1.2125, the immediate support level would probably cause a stronger bearish run towards the support/resistance line seen at the beginning of December (1.2120). This would further increase the notion that the path of least resistance is lower, possibly testing the 1.20 psychological line.
Alternatively, a break above 1.2170 could see buyers regain control in an attempt to bring EUR/USD aiming for 1.2270.
