EUR/USD Price Analysis: Struggle with 21-DMA continues ahead of US inflation

• EUR/USD closes Thursday below 21-DMA, caution for bulls.
• Cautious mood, dovish ECB and firmer Treasury yields weigh on the spot.
• Downside appears more compelling, with support at 1.1242 likely at risk.

EUR/USD is seeing some fresh selling pressure while trading below 1.1300 in the European session on Friday, as the bears extend control amid rebounding Treasury yields and risk-aversion.

The Fed-ECB monetary policy divergence continues to render negative for the euro, especially after the ECB is reportedly planning to boost its regular Asset Purchase Program (APP) at its next week’s policy meeting.

Meanwhile, the latest uptick in the yields is driving the greenback higher, exerting additional downside pressure on the main currency pair ahead of the US inflation release.

Technically, the spot is trading on the defensive below the 21-Daily Moving Average (DMA) at 1.1302 following Wednesday’s close below the latter.  

The 14-day Relative Strength Index (RSI) continues to trade below the 50.00 level, keeping the EUR sellers cheerful.  

Any pick-up in the downside momentum could put the rising trendline support of 1.1242 at risk.

Daily closing below the latter will expose the 1.1200 level. The next stop for EUR bears is seen at the yearly lows of 1.1185.

EUR/USD: Daily chart

On the flip side, acceptance above the 21-DMA will call for a test of the 1.1350 psychological level.

Further up, buyers could look out for a rally towards the 1.1400 round number.

EUR/USD: Additional levels to consider