- Falling treasury yields fail to put a bid under the EUR/USD pair.
- A weaker-than-expected German jobs data could prove costly for the shared currency.
- Gains, if any, on the back of strong German data could be short-lived, as the Chinese Yuan is losing ground.
EUR/USD is trading on the back foot near 1.1165 at press time despite the fresh multi-month lows in the US treasury yields and could suffer a deeper drop if the German jobs data due later today misses expectations.
The common currency was offered at the descending 10-day moving average of 1.1206 on Monday and fell 0.28% to 1.1160 on Tuesday. The pair did pick up a bid in the Asian session today only to carve out a bearish lower high at the 200-hour moving average of 1.1173.
The losses in the EUR/USD pair are somewhat surprising, given the US 10-year treasury yield has dropped almost 10 basis points this week. As of writing, the benchmark yield is trading at the 20-month low of 2.24%.
It appears the investors are focused on escalating trade tensions and are paying little heed to the yield differentials.
Focus on German data
German data due at 07:55 today is expected to show the economy shed 8K jobs in May following a 12k drop in employment in April. The jobless rate is forecasted to remain unchanged at 4.9%.
A bigger-than-expected decline will likely bolster the fears of deeper economic slowdown in the Eurozone’s largest economy and push the common currency toward the recent low of 1.1107.
On the other hand, a big beat on the jobs data may push EUR/USD higher to 1.12. The gains, however, will likely be short-lived if the Chinese yuan continues to lose ground. It is worth noting that the USD/CNH pair has created a bull flag pattern on the daily chart.
Also, apart from the German data, the pair may take cures from German Bundesbank President Weidmann's speech, due at 07:00 GMT.