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EUR/USD: Euro may pick up a strong bid on sliding treasury yields and rising yuan

  • EUR/USD is heading into European session 0.15 percent higher.
  • European desks may put a strong bid under the EUR, tracking the slide in the treasury yields and the rise in the Chinese yuan.
  • The falling Italy-German yield spread also favors upside in the EUR.
The EUR/USD could challenge a key resistance at 1.1402 today, tracking the slide in the 10-year treasury yield and the rise in the Chinese yuan – an anchor for global markets.

The common currency scored marginal gains in Asia as the benchmark US Treasury yield fell below the 200-day moving average (MA) of 2.96 percent – its first drop below the long-term average since November 2017.

Notably, the 10-year treasury yield risks falling further as indicated by the double top breakdown, confirmed last week.

Further, Chinese yuan (CNY) fell to 6.8357 in Asia – the lowest level since Sept. 21 – and could slide further to 6.80. The common currency has been closely following the action in the Chinese yuan off late. 

As a result, the bullish move in the EUR/USD could gather pace in Europe, all the more so, as the Italy-German 10-year bond yield spread continues to fall, signaling easing concerns about Italy's fiscal issues.

The spread fell to 283 basis points yesterday, the lowest since Oct. 3 and could slide further, having suffered a double top breakdown on Friday.

EUR/USD Technical Levels

EUR/USD

Overview:
    Today Last Price: 1.1378
    Today Daily change: 33 pips
    Today Daily change %: 0.291%
    Today Daily Open: 1.1345
Trends:
    Previous Daily SMA20: 1.1357
    Previous Daily SMA50: 1.1443
    Previous Daily SMA100: 1.1527
    Previous Daily SMA200: 1.176
Levels:
    Previous Daily High: 1.1382
    Previous Daily Low: 1.132
    Previous Weekly High: 1.1402
    Previous Weekly Low: 1.1267
    Previous Monthly High: 1.15
    Previous Monthly Low: 1.1216
    Previous Daily Fibonacci 38.2%: 1.1343
    Previous Daily Fibonacci 61.8%: 1.1358
    Previous Daily Pivot Point S1: 1.1316
    Previous Daily Pivot Point S2: 1.1287
    Previous Daily Pivot Point S3: 1.1254
    Previous Daily Pivot Point R1: 1.1378
    Previous Daily Pivot Point R2: 1.1411
    Previous Daily Pivot Point R3: 1.144