EUR/USD solid around 1.1290s as high US T-bond yields boost the greenback

• The single currency slides for the second consecutive day, down some 0.04%.
• US Treasury yields extend their weekly rally, with the 10-year closing to the 1.70% threshold.
• EUR/USD has a downward bias in the near term, as the upward move stalled around the hourly 50, 100, and 200-SMAs, retreating below the 1.1300 figure.

The EUR/USD extends its losses to two days, trading at 1.1292 at the time of writing. The greenback continues to benefit against the low-yielder euro by rising US Treasury yields, led by the 10s, the 20s, and 30s, rising between 5 to 7.5 basis points, sitting at 1.682%, 2.1180%, and 2.090%, respectively.

That said, the buck rebounded after dipping during the London fix, as low as 96.03, flat during the day, at 96.24. Despite the lack of movement of the greenback, market participants begin to position for at least three-rate hikes as portrayed by US money market futures, expecting the first lift-off once the bond-taper ends by March of 2022.

Minneapolis Fed Kashkari (FOMC 2022 voting member) eyes two rate hikes in 2022

European Central Bank Governing Council Member and Head of the Banque of France Francois Villeroy and Minneapolis Fed President Neil Kashkari crossed the wires in the last couple of hours. In the case of Francois Villeroy de Galhau, he said that inflation in France is “now close to its peak and in the euro area.” Additionally said that “we believe that supply difficulties and energy pressures should gradually subside over the course of the year.” His remarks came after Fresh France HICP showed an increase of 3.4% in the annual base inflation, a 13-year high.

In the meantime, Neil Kaskari said that he nows sees two rate hikes in 2022. He expects the first rate hike to be met after the April 2022  economic data is released, signaling his support for a May rate hike.

EUR/USD Price Forecast: Technical outlook

The EUR/USD 1-hour chart shows that bears are in control, as portrayed by the simple moving averages (SMAs) residing above the spot price. Indeed the aforementioned stalled the upward move from 1.1276 up to 1.1320s, as EUR bulls failed to capitalize good macroeconomic data, hurt by technical indicators, alongside the interest rate differentials between the Federal Reserve and the ECB.

On the downside, the first support would be the January 3 daily low at 1.1280. A break under that level could send the pair tumbling towards the S1 daily pivot at 1.1259, intersection with an upslope trendline drawn from the November cycle lows up to the December ones.