EUR/USD Vulnerable to Significant Downward Movement as US Treasury Yields Increase; Quick Daily Outlook

The EUR/USD pair is on the verge of a significant downward movement in the Asian session as it appears vulnerable.

Arslan Butt•Thursday, March 2, 2023•2 min read

The EUR/USD pair is on the verge of a significant downward movement in the Asian session as it appears vulnerable below the crucial support level of 1.0660. The bearish sentiment in the major currency pair is reinforced by the increasing US Treasury yields, reflecting a considerable drop in market players’ risk appetite.

S&P 500 futures have carried over the negative sentiment from Wednesday’s trading session, as the US ISM Manufacturing PMI fell for the fourth consecutive time. The Manufacturing PMI has been declining for the past four months. Against the backdrop of risk aversion, the US Dollar Index (DXY) is attempting to break the immediate barrier of 104.30. The yield on 10-year US Treasury bonds has risen to around 4.03%.

An analysis of US ISM Manufacturing PMI data reveals indications of a Consumer Price Index (CPI) revival. The New Orders Index data has increased to 47.0 from an expected 43.7 and the previous release of 42.5, indicating a positive outlook. Furthermore, Manufacturing Prices Paid increased to 51.3 from an expected 45.0. Producers may try to pass on the impact of higher prices paid to final consumers, thus resuming the inflation cycle. As a result, the Federal Reserve (Fed) believes that it would be premature to delay further rate announcements at this time.

EUR/USD Technical Outlook

Yesterday, the EUR/USD pair had more positive trades, reaching 1.0650 and attempting to confirm a breach of it. This indicated an attempt to end the negative scenario and return to the bullish track. However, today the price opened negatively and is putting pressure on the mentioned level, as it is affected by stochastic negativity, which is pushing the price to decline.

Therefore, there is a possibility of trading negatively in the forthcoming sessions, with the next key target being 1.0515. Breaking 1.0625 will make it easier to achieve this target.

On the other hand, consolidating above 1.0650 with a new daily close above it will push the price to accomplish greater gains and visit 1.0745 as the next positive station.

The predicted trading range for today is between the support level of 1.0560 and the resistance level of 1.0720.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.