EUR/USD deflates to fresh daily lows as 2-yr T-yield extends gains

Fresh bids for the US dollars continue to flow-in as the 2-year yield paid little heed to Yellen’s balancing act and extended gains to a fresh session high of 1.267%. 

The 2-yr yield now trades 10 basis points higher on the day. Consequently, the EUR/USD pair extended losses to a fresh session low of 1.0530 levels. EUR clocked a high of 1.0670 earlier today, before the hawkish Fed dot plot chart caught markets off guard. 

In terms of technical pattern, the daily chart shows a bearish 5-DMA and 10-DMA crossover.  The spot remains at the mercy of the action in the treasury yields. 

EUR/USD Technical Levels

A break below 1.05 (zero figure) could yield a drop to 1.0463 (March 2015 low). A daily close below the same would mark a bearish break from the 1-1/2 year long range and open doors for parity.  Moreover, heightened odds of faster rate hikes in 2017 as suggested by the dot plot chart have once again underscored the interest rate differential. 

On the higher side, only a move back above 1.06 (zero figure) could yield a re-test of 1.0670 (daily high) and 1.07 (zero figure).