The pair is falling back to just below 1.1400 now as the greenback is posting a decent advance across the board so far today. Even though European yields are also keeping higher, Treasury yields are also continuing the upside push from last week currently.
10-year Treasury yields are up 3.6 bps to 1.952% while 2-year Treasury yields are up 3.9 bps to 1.335% on the day.
The market remains convinced, or at least trying to stay mindful to the risk, that the Fed may be on course to tighten policy at a quicker pace in the months ahead. I reckon what is priced in now for the ECB this year is all good and done, so risks are to the downside in case the ECB disappoints in March.
I would argue that it would be the same for the Fed but there are punters still arguing for a 50 bps rate hike during the FOMC meeting next month. For me, I'd say that is unlikely unless we do hear Fed speakers try and and open that door in the weeks ahead.
Going back to EUR/USD, the drop also comes as price fails to breach the January high @ 1.1483. The pullback now sees price dipping below its 100-day moving average @ 1.1422 and that will be a good technical victory for sellers, even better if price can keep below 1.1400.
Looking at the near-term chart:
We are moving close to testing the 100-hour moving average @ 1.1394 and that will be one to watch in the sessions ahead. Break below and the near-term bias turns more neutral, leaving room to roam between that and 1.1300. But keep above that (preferably also above 1.1400) and buyers will still retain some upside bias heading into Thursday's US inflation report.
