EUR/USD Price Analysis: Extends the drop towards 1.1250, as 21-DMA gives way

• EUR/USD drops back below 21-DMA as the US dollar regains poise.
• US dollar rebounds with Treasury yields amid a cautious market mood.
• The pair looks to test symmetrical triangle support at 1.1244 on the daily sticks.

EUR/USD is resuming the decline below 1.1300, having met fresh supply over the last hour, as the US dollar catches a fresh bid in tandem with the Treasury yields.

The mixed market mood, amid rising covid cases in Europe and the optimism over the less severe effects of the new Omicron variant, benefiting the safe-haven US dollar.

Additionally, rising inflation expectations continue to back the case for a March Fed rate hike, allowing the dollar to keep an upper hand over the euro. The ECB policymakers continue dismissing a 2022 rate hike.

Looking at EUR/USD’s daily chart, the price tested the upper boundary of a month-long symmetrical triangle formation earlier this week.

But sellers continued to lurk near mid-1.1300s, knocking the rates back below the 21-Daily Moving Average (DMA) at 1.1300.

The extended weakness below the latter put the focus back on the triangle support, which is pegged at 1.1244.

The triangle breakdown will get confirmed on a daily candlestick closing below the latter, with the yearly lows of 1.1186 back on sellers’ radars.   

The 14-day Relative Strength Index (RSI) has turned south below the 50.00 level, suggesting that there are increased odds of a potential leg lower.

EUR/USD: Daily chart

On the flip side, recapturing 21-DMA support-turned-resistance is critical for bulls to regain control.

Fresh buying opportunities will emerge above the latter, opening doors for a rally towards the falling trendline (triangle) resistance at 1.1339.  

If the price breaks through that barrier, then an upside breakout from the symmetrical triangle will get validated, triggering a fresh advance towards the bearish 50-DMA at 1.1391.

EUR/USD: Additional levels to consider