- EUR / USD retreats from 2-week highs as dollar bulls regain control.
- Spot retraces 200-DMA, but upside potential is limited by a pullback in US rates.
- The bullish RSI still gives buyers hope with the 50-DMA.
EUR / USD the pair continues to retreat from two-week highs at 1.1927 as bears test the 1.1900 support area amid resurgent demand for the US dollar as Treasury yields recover.
The relentless rise in coronavirus cases in Asia, fears over the side effects of the AstraZeneca vaccine and mixed inflation data in China scare investors as they seek safety in US dollars. Treasury yields are also trying to rebound after a mild downturn prompted by comments from Fed Chairman Jerome Powell.
Euro traders are now eagerly awaiting a host of macroeconomic news from the Eurozone, including data on industrial production. Meanwhile, the dynamics of the US dollar may continue to weigh on the pair ahead of the release of the US Producer Price Index (PPI) later on Friday.
EUR / USD: a technical perspective
EUR / USD: daily chart
The near-term technical outlook appears to be constructive as seen in the daily chart. On Thursday, EUR / USD hit the 200-day moving average (DMA) at 1.1894 again on Thursday as the 14-day Relative Strength Index (RSI) broke below the middle line.
At the moment, the technical setup remains in favor of the bulls, despite the spot pullback from higher levels.
Consequently, euro buyers continue to seek 50-DMA resistance at 1.1969 as long as the 200-DMA support holds.
A sustained break below the latter could expose the horizontal 21-DMA at 1.1850.
In conclusion, it should be noted that the upside potential for the major currency pair looks more convincing as investors are likely to resort to bargaining at lower levels.