EUR/USD slipped below 1.0600 once again before the European session. According to analysts, the US Dollar is reversing its losses mainly due to the rise in the US treasury yields. Similarly, the Bank of Japan has also revised its yield policy which is also affecting the EUR/USD.
EUR/USD must end up closing below its 10 SMA (daily), which is around 1.0585. According to experts, this is very important for the EUR/USD sellers. On the other hand, the support of around 1.0655 (November 30) continues to push the pair higher in the near-term.
Similarly, the MACD is bearish, while the RSI is sluggish for the EUR/USD. These two indicators are keeping the EUR bears hopeful that the pair can move lower once again.
The Dollar Index (DXY) has gained a total of 60 pips after reaching its intraday lows. The main catalyst for this uptick in the DXY is the BOJ changing its yield curve control. According to the BOJ, the new upper limit for the YCC is now set at 0.50%. Similarly, the BOJ is also ready to issue more bonds if necessary.
Available information suggests that Japan is among the largest buyers of US T-bonds. So any policy shift from the BOJ can have a major impact on the DXY. Overall, Fed's policy has simply failed to impress the Dollar Index bulls despite the recent upside moves.
If we look at the European side, the central bank of Europe is very hawkish, as witnessed during the recent comments. So based on this, the bias for the EUR/USD is toward the upside.
On the other hand, the US stock futures are downbeat, and the US T-yields are stable, which is restricting the USD moves toward the downside. However, this also puts a floor on the EUR/USD prices and thus makes the pair look ahead for fresh impulse.