EUR/USD Bulls Face Key Technical Hurdles as Yield Spreads Threaten Upside Momentum
Technical Analysis:
EUR/USD bulls found themselves on uncertain footing Tuesday, unable to maintain intraday gains despite an initially favorable backdrop of softer U.S. yields and broader dollar weakness. The pair opened New York trade near 1.0930 after an earlier European session peak at 1.0992, and briefly rebounded to 1.0968 as equities and gold rallied. However, selling pressure quickly emerged amid widening German-U.S. 2-year yield spreads—historically a strong indicator of EUR/USD direction. The pair subsequently retreated to an intraday low of 1.0888, highlighting the increasing difficulty for bulls in sustaining higher levels amid persistent tariff-related market uncertainties.
From a technical perspective, EUR/USD’s inability to decisively reclaim its short-term 5-day moving average near 1.0950 is concerning for bullish traders. Moreover, Tuesday’s formation of a daily inverted hammer candle signals weakening bullish momentum and growing risk of a short-term reversal. On a broader timeframe, the monthly chart also exhibits an inverted hammer formation, implying potential trend exhaustion. Key short-term support now lies at the intraday low near 1.0888, with a clear break potentially accelerating declines toward the psychologically critical 200-day moving average at approximately 1.0730.
Looking forward, EUR/USD bulls must overcome immediate resistance at the 1.0968–1.0992 area to regain bullish control. However, upside potential appears increasingly threatened by further widening in yield spreads driven by rising U.S. Treasury yields. Traders will closely monitor upcoming U.S. inflation data (March CPI and PPI) for guidance; stronger-than-expected readings could fuel hawkish Fed expectations, increasing downward pressure on EUR/USD, and potentially triggering a deeper correction toward key structural supports.