EUR/USD deflates to 1.1400, USD rebounds

The now better sentiment around the buck is prompting EUR/USD to fade the initial spike to the vicinity of 1.1460 and re-focus on the 1.1400 neighbourhood.

EUR/USD weaker ahead of Yellen

Spot is retreating for the second straight session so far against the backdrop of a renewed buying interest around the buck, softer yields in German money markets and positive performance from equity markets in the Old Continent.

In fact, the German 10-year benchmark is trading back in the 0.57% area after clinching fresh multi-month peaks near 0.65% on Wednesday, levels last seen in January 2016.

Earlier in the session, final CPI prints in Euroland for the month of June were far from having any impact on sentiment, while another testimony by Chief Yellen is expected later today followed by US June’s producer prices, initial claims and speeches by Chicago Fed C.Evans (voter, centrist) and L.Brainard (permanent voter, dovish).

EUR/USD levels to watch

At the moment, the pair is losing 0.10% at 1.1401 facing the immediate support at 1.1380 (low Jul.10) followed by 1.1311 (low Jul.5) and finally 1.1308 (21-day sma). On the flip side, a breakout of 1.1489 (2017 high Jul.12) would open the door to 1.1500 (psychological handle) and then 1.1616 (2016 high May 3).