EUR/USD bears flex muscles above 1.0500 ahead of US Durable Goods Orders

• EUR/USD remains depressed near the seven-week low as bears poke intraday bottom.
• Upbeat US Treasury bond yields, hawkish Fed bets contrast with hopes of higher ECB rates to challenge Euro pair sellers.
• US data, UN Human Rights Council session eyed for intraday directions.

EUR/USD bears poke the 1.0540-30 support confluence surrounding the seven-week low amid the lackluster markets heading into Monday’s European session. In doing so, the major currency pair struggles to justify hawkish European Central Bank (ECB) concerns ahead of the key US data and geopolitical events.

That said, the US Dollar Index (DXY) grinds near an intraday high of around 105.30 following the initial pullback from a seven-week high. The US Dollar’s recent run-up could be linked to the strong US Treasury bond yields, as well as hawkish Fed talks and fears of more geopolitical tension surrounding Ukraine.

It’s worth noting that upbeat US inflation-linked data from the US joined the Fed policymakers’ support for higher rates to propel the Fed fund futures to above 5.30%, versus 5.10% expected by the US central bank in December. The same joins the latest bout of sanctions on Russia from the West to escalate the market’s fears of a more geopolitical burden on the bloc, which in turn increases the odds of a recession in the Old continent even if the policymakers have been against the same of late.

It’s worth observing that ECB President Christine Lagarde advocated the need for higher rates during the weekend while speaking to the Helsingin Sanomat. On the same line, ECB policymaker and Bundesbank Chief Joachim Nagel said on Friday, he “can't rule significant further rate hikes after March.”

Amid these plays, the US 10-year Treasury yields reverse the early-day losses to around 3.95%. Further, the two-year counterparts jump back towards the highest levels since November 2022, marked the previous day, as bond bears poke the 4.83% level by the press time. Further, the S&P 500 Futures lick its wounds with mild gains after the Wall Street benchmark posted the biggest weekly slump of 2023.

Moving ahead, the start of the U.N. Human Rights Council session in Geneva becomes crucial for the EUR/USD pair watchers ahead of the US Durable Goods Orders for January, expected -4.0% versus 5.6% prior. Considering the downbeat expectations from the US data, the pair sellers may witness further hardships in breaking the 1.0540-30 key support.

Technical analysis

An 11-week-old ascending support line joins the 200-bar Exponential Moving Average (EMA) to highlight the 1.0540-30 as the key support for the EUR/USD bears to watch during the quote’s further downside. That said, oversold RSI conditions add strength to the stated support zone.