EUR/USD looks offered, falters once again near 1.2000

EUR/USD fades the move to the 1.1990 region.
The dollar picks up pace on higher US yields.
German final February CPI rose 07% MoM, 1.3% YoY.
The single currency sees its recent upside reversed and EUR/USD receding to the 1.1930 region on Friday.

EUR/USD looks to yields for direction
EUR/USD trades on the defensive for the first time after three consecutive daily advances, meeting once again a tough resistance in the vicinity of the psychological barrier at 1.20 the figure.

The exclusive driver behind the pair’s retracement remains the performance of US yields, which appear to have resumed the upside following the knee-jerk post-US inflation figures (Wednesday). The move lower in yields was linked to eased expectations of higher inflation in the US due, mainly, to the upcoming extra fiscal spending.
No news from the ECB at its meeting on Thursday. The central bank left the interest rates unchanged, as broadly expected, although the Council announced it will accelerate the pace of asset purchases in the next quarter, although it unveiled no further details.

In the euro docket, the German final CPI rose at a monthly 0.7% in February and 1.3% from a year earlier, matching the preliminary prints. Later in the session, Industrial Production figures for the broader Euroland are due.
Across the pond, Producer Prices for the month of February will be published seconded by the flash Consumer Sentiment for the current month measured by the U-Mich index.

What to look for around EUR
EUR/USD’s bullish attempt failed to re-visit the 1.20 neighbourhood in past hours. The solid rebound in the greenback as of late put the previous constructive stance in the euro under heavy pressure, as market participants continue to adjust to higher US yields and the outperformance of the US economy. A move below the critical 200-day SMA (around 1.1815) should shift the pair’s outlook to bearish in the near-term. In the meantime, price action around EUR/USD is expected to exclusively gyrate around the dollar’s dynamics, developments from yields on both sides of the ocean, extra fiscal stimulus in the US and the global economic recovery.

Key events in Euroland this week: EMU’s Industrial Production (Friday).

Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always amidst the current (and future) context of subdued inflation. Potential political effervescence around the EU Recovery Fund. Huge long positions in the speculative community.

EUR/USD levels to watch
At the moment, the index is losing 0.41% at 1.1934 and faces the next support at 1.1835 (2021 low Mar.9) seconded by 1.1828 (200-day SMA) and finally 1.1762 (78.6% Fibo of the November-January rally). On the other hand, a break above 1.1989 (weekly high Mar.11) would target 1.2097 (50-say SMA) en route to 1.2113 (monthly high Mar.3).