EUR/USD: Hurdle to 1.2200 Remains Despite US Dollar's Retreat

Summary:

EUR/USD is trading higher as the US dollar declines. Treasury yields remain on a decline at 1.64 after hitting a month-high of 1.70 last week.

EUR/USD is trading higher as the US dollar retreats. The greenback for close to a week amid declining US Treasury yields. After hitting a one-month high of 1.70 in the past week, the benchmark 10-year yields have dropped to 1.64. Consequently, the dollar index is at a one-week low of 90.10.

In today’s session, EUR/USD will be impacted by data on US housing starts and building permits. According to the Census Bureau, the government issued 1.759 million building permits in March. Analysts expect April’s number to be higher at 1.770 million. As for housing starts, the expected 1.710 million is lower than March’s 1.739 million.

EUR//USD will also be reacting to Eurozone’s second preliminary GDP data. Analysts have left their forecast for Q1’21 unchanged from the first preliminary figure of -1.8% YoY.

EURUSD Technical Outlook

EUR/USD is trading higher as a continuation of the rebound in the prior session. Earlier on Tuesday, it was up by 0.14% at 1.2167. On a two-hour chart, it is above the 15 and 50-day exponential moving averages. Besides, the currency pair has formed an inverted head-and-shoulder pattern, which is a bullish formation.

Based on the bullish outlook, I expect EUR/USD to trade sideways at around the resistance level of 1.2170. If the bulls manage to push the price past that level, the next target will be at 1.2182. However, this thesis will be invalidated by a move below 1.2150.