EUR/USD Edges Lower Amid Higher U.S. Yields
2022.10.20 19:37
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The pair retreated on Wednesday as the U.S. dollar gained momentum on the back of risk aversion and a spike in the yield, which climbed to its highest level since 2008. Despite mixed data from the housing market, the dollar managed to keep its momentum.
At the time of writing, the EUR/USD pair is trading at the 0.9775 area, 0.8% below its opening price, after bottoming at 0.9757 earlier in the session.
The yield on the U.S. 10-year bond climbed to a high since July 2008 of 4.134%, boosting the greenback across the board. The , DXY, advanced 0.8% to trade around 112.90 after hitting a daily peak of 113.09.
In the meantime, U.S. housing market data showed that the September increased by 1.4% MoM, but the declined by 8.1% in the same period. The tighter financial conditions imposed by the Fed will likely continue to weaken the sector amid the economic slowdown and higher mortgage rates.
Across the pond, the eurozone final rate for September was slightly revised to 9.9%, but the data had little impact on the shared currency.
From a technical perspective, the EUR/USD pair retains the short-term bearish bias according to indicators on the daily chart. The RSI fell below its midline, while the MACD printed a lower green bar, signaling dwindling buying momentum.
The immediate support level is seen at the 20-day SMA at 0.9767. A break below this level could pave the way toward the 0.9700 mark en route to the 0.9635 area.
On the other hand, immediate resistance levels could be faced at the 0.9800 and 0.9900 zones. In case of breaking above, the bulls may gather enough momentum to retest parity.
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