EUR/USD eyes further losses below 1.0700 as yields underpin firmer USD

• EUR/USD remains pressured for the third consecutive day.
• Hawkish Fedspeak, upbeat NFP renews bets on faster Fed rate hikes.
• Euro traders turn cautious ahead of ECB, with eyes on receiving clues for July rate lift.
• German Factory Orders, US goods trade numbers will decorate the calendar.

EUR/USD holds lower grounds near 1.0680 during Tuesday’s Asian, after two consecutive days of downturn, as mixed sentiment and firmer yields favored bears ahead of this week’s key data/events. The major currency pair witnessed an upbeat start of the week before the US Treasury yields recalled the US dollar buyers.

Global markets witnessed a dull start to the key week with holidays in Germany, France, New Zealand and Switzerland. However, the risk markets improved during the early Monday before taking a U-turn as the US markets opened.

The earlier optimism could be linked to Beijing’s ability to overcome the pandemic and citing preparations to recover from the economic loss with faster unlocks. On the same line was news of US President Joe Biden’s likely easy stand for China, as far as showing readiness to remove Trump-era tariffs.

On the contrary, firmer US Nonfarm Payrolls (NFP) and the hawkish appearance of the Fedspeak’s last dose before the blackout norm favored the US Treasury yields to extend the first weekly gains in four, up by around 10 basis points (bps) to 3.04% at the end of Monday’s North American session.

Amid these plays, the Wall Street benchmarks closed with mild gains whereas the US Dollar Index (DXY) rose for two consecutive days, around 102.30 by the press time.

Looking forward, the return of full markets and German Factory Orders for April, expected 0.5% versus -4.7% prior, can entertain EUR/USD traders ahead of the US Goods and Services Trade Balance for the said month, forecast $-89.5B compared to $-109.8B previous readouts.

It should be noted, however, that major attention will be given to Thursday’s European Central Bank (ECB) monetary policy meeting and Friday’s US Consumer Price Index (CPI) for May.

Also read: US yields soar ahead of this weeks closely watched US bond auction, oil lower on rare supply good news

Technical analysis

A three-week-old ascending trend line, around 1.0680, challenges EUR/USD sellers before directing the bears to the previous weekly low surrounding 1.0630-25. Recovery moves, however, need validation from a one-week-long downward sloping resistance line, close to 1.0755 by the press time.