EUR/USD rebound aims for 1.0930 as US Dollar traces retreat in Treasury bond yields

• EUR/USD extends recovery from one-week low to refresh intraday top, snaps two-day losing streak.
• US Dollar traces downbeat Treasury bond yields as markets reassess Fed bets ahead of key US data/events.
• Eurozone Retail Sales can prod Euro pair buyers but cautious optimism may keep corrective bounce intact.
• US inflation, Fed Minutes are the key catalysts for EUR/USD traders to watch for clear directions.

EUR/USD picks up bids to refresh intraday high near 1.0890 as European traders return from a long weekend on Tuesday. In doing so, the Euro pair cheers broad US Dollar weakness amid cautious optimism in the market, as well as fresh doubts on the Federal Reserve’s (Fed) hawkish moves.

It’s worth noting that easing recession woes joins receding fears of more banking fallouts to prod the bond-buying and weigh on the Treasury yields. The retreat in yields and cautious mood ahead of the US inflation data, as well as the Federal Reserve (Fed) meeting minutes, weigh on the US Dollar.

As a result, the US Dollar Index (DXY) snaps a four-day uptrend while declining to 102.35 by the press time, down 0.20% intraday. That said, the S&P 500 Futures print mild gains around 4,141 at the latest while the US 10-year and two-year Treasury bond yields retreat to 3.40% and 3.97% by the press time.

Late on Monday, the Federal Reserve (Fed) Bank of New York President, as well as the Fed’s Vice Chairman of the rate-setting committee, John Williams, raised doubts on the recently hawkish calls of the Fed 0.25% rate lift. Following him was Rick Rieder, Chief Investment Officer of global fixed income at BlackRock, the world's largest asset manager, who said late Monday, “The Federal Reserve may not need to raise interest rates further to fight inflation, as the fallout from last month's turmoil in the banking sector and a series of recent labor data point to a slowing US economy,” per Reuters.

Even so, CME’s FedWatch Tool prints nearly 68.7% odds of the US Central Bank's 0.25% rate hike in May, versus the previous day’s 71.2%, and challenges the market sentiment, as well as the EUR/USD buyers. Also weighing on the risk appetite and the Euro prices could be the downbeat China inflation data and anxiety ahead of top-tier US data/events.

Moving on, EUR/USD pair traders should pay attention to Eurozone Retail Sales for March, expected -3.5% YoY versus -2.3% prior, for intraday directions. However, the performance of yields on the full markets’ return will be crucial to watch for a clear guide.

Technical analysis

EUR/USD rebounds from a convergence of the 100-SMA and a two-week-long ascending support line, around 1.0840-45, which in turn joins steady RSI to suggest a continuation of corrective bounce towards a 13-day-old horizontal resistance area surrounding 1.0930.