EUR/USD Price Analysis: Rebound remains capped below 21-DMA

• EUR/USD rises for the first time in three days but 21-DMA offers stiff resistance.
• Falling Treasury yields keep EUR bulls hopeful amid a quiet session.
• The EUR bulls need to defend the 1.1232 support on the daily sticks.

EUR/USD is attempting a bounce from weekly lows of 1.1227, although sellers continue to lurk at 1.1300 amid a lack of relevant economic data.

The main currency pair is hovering just shy of the 1.1300 mark, adding 0.23% on the day, as the risk-on flows driven US dollar weakness aids the rebound. Also, the renewed downside in the US Treasury yields adds to the dollar’s pullback, benefiting EUR/USD’s recovery.

Despite the uptick, EUR bulls remain cautious amid the divergent monetary policy outlook between the Fed and ECB, with Friday’s US inflation data likely to bolster the Fed’s tapering expectations.

From a short-term technical perspective, the spot is advancing but remains capped between the 21-Daily Moving Average (DMA) at 1.1315 on the upside.

Meanwhile, the downside remains cushioned by the rising trendline support on the daily sticks at 1.1232.

The 14-day Relative Strength Index (RSI) is trading flatlined below the 50.00 level, suggesting the risks remain skewed to the downside.

Therefore, daily closing below the abovementioned critical support will open floors for a retest of 1.1200.

The next stop for EUR bears is seen at the yearly lows of 1.1185.

EUR/USD: Daily chart

On the flip side, recapturing the 21-DMA is critical for unleashing the recovery towards the 1.1350 psychological level.

Further up, the 1.1400 round figure could be put to test.

EUR/USD: Additional levels to consider