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EUR/USD Trims Previous Week’s Losses

Published 02/27/2023, 09:49 AM
Updated 07/09/2023, 06:32 AM

The EUR/USD pair trades higher on Monday after five consecutive days of losses on the back of durable goods data coming in on the weak side in January. As recession fears increase, U.S. bond yields took a U-turn, weighing on the dollar.

At the time of writing, the EUR/USD pair is trading at 1.0580, 0.34% above its opening price, after hitting a fresh multi-week low of 1.0532 earlier on Monday. Meanwhile, the U.S. dollar, measured by the US Dollar Index Index, trades at the 104.91 area, posting a 0.32% loss on the day.

Data from the U.S. Census Bureau showed that Durable Goods Orders dropped by 4.5% in January, worse than the 4% decline expected, while the Nondefense Capital Goods Orders tumbled by 5%, surprising the market as the expectations were for a 0.1% increase. 

U.S. bond yields turned lower following the data release, with the United States 10-Year note yielding 3.90%, while the 2 and 5-year bond rates are at 4.77% and 4.16%, respectively, all three of them shedding around 1% on the day.

For the rest of the week, investors will eye S&P and ISM PMIs data for both the U.S. and the Eurozone, as well as inflation data for the latter and the U.S. nonfarm payrolls on Friday.

EUR/USD Daily Chart

From a technical perspective, the EUR/USD holds a short-term bearish bias according to indicators on the daily chart. However, they are losing bearish momentum, likely pointing to an upwards corrective move. At the same time, the price consolidates between the 20- and 100-day moving averages.

On the upside, EUR/USD's next resistance level could be found at 1.0600, followed by the 20-day SMA at the 1.0715 area. On the flip side, short-term supports are seen at the 1.0500 level, followed by the January lows at 1.0483 and then 100-day SMA, currently at around 1.0460.

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