EUR/USD keeps just above 1.1300 for now but price action is trapped between the key hourly moving averages
The pair has maintained a solid run over the past few weeks, rising from just under 1.0800 to near the 1.1500 level before seeing a bit of a pause over the last few days.
During the course of its ascend, the two factors that can be said to be helping the euro were short covering on carry trades (euro as a funding currency) and the tightening in the Treasury-Bund yields spread with Treasury yields capitulating.
The latter also weighed on the dollar for the most part but for this week, the situation is a bit more tricky. 10-year Treasury yields may be down by 11 bps today to 0.75% but in comparison to the record low of 0.31% on Monday, that's a 44 bps rise in yields so far.
I reckon that is in part to do with helping the dollar regain some footing and EUR/USD is seeing a pause in the upside move as such as well.
For now, the pair has moved back below the 100-hour MA (red line) @ 1.1348 but is keeping above the 200-hour MA (blue line) @ 1.1251. The near-term bias is now more neutral.
As such, buyers and sellers will have to battle it out now to try and get a clear directional break on either side to shift the near-term direction in the pair.
From a fundamental perspective, one of the key questions in the market is whether or not we have seen the bottom for Treasury yields.
If so, the dollar may have some scope to gain as we see yields retrace further. However, with the market environment so volatile, it is hard to rule anything out as of yet. But as traders, we can always lean on the chart for more of a gauge on what to do next.
In the case of EUR/USD, look for that near-term directional break on either side of the key hourly moving averages and pair that alongside sentiment in Treasuries.
