- EUR/USD is on the defensive below the 100-day average.
- With oil regaining poise, treasury yields are looking to resume the post-US ISM PMI rise.
- The uptick in US yields will likely keep the pair under pressure.
EUR/USD is currently trading below the 100-day moving average at 1.1068, having faced rejection near 1.11 on Tuesday.
The American dollar found bids during the North American session after the US ISM Manufacturing Purchasing Managers’ Index bettered expectations with a score of 50.9 in January. That was the first above-50 reading in six months.
EUR/USD, therefore, fell to 1.1035 before regaining some poise to end the day at 1.1059. The minor recovery happened as oil cracked support at $50, pushing treasury yields lower.
The sell-off in WTI, however, ran out of steam in Asia, and the black gold is now trading well above $50, representing a 1.2% gain on the day.
With oil regaining the $50 handle, the treasury yields may resume the post-ISM PMI rise, helping the US dollar score gains against the EUR and other majors.
At press time, the US 10-year yield is trading at 1.54%, representing a three basis points rise from the low of 1.51% observed in early Asia.
On the data front, Eurozone Producer Price Index for December is scheduled for release at 10:00 GMT. In the US docket, Factory Orders for December will take center stage.
The pair is still trapped in a falling channel represented by trendlines connecting Dec. 31 and Jan. 16 highs and Jan. 10 and Jan. 28 lows. A daily close above 1.1095 is needed to confirm a breakout. That would create room for a rally to the Jan. 16 high of 1.1173.
On the other hand, acceptance under Monday’s low of 1.1035 would bring additional losses toward the Nov.29 low of 1.0981. A close lower would see sellers target the 2019 low of 1.0879.