EUR/USD Tests Key Support Amid Rising U.S. Yields and Hawkish Fed Expectations

The EUR/USD pair has been trading around $1.137 for several days after three weeks of declines and has reached one of the most important technical zones of recent months.

The key area to watch is between 1.1325-1.1360, where July lows, a rising trendline from summer lows, and levels that previously triggered upward impulses converge.

The main pressure on the pair remains from the U.S. bond market, with 10-year Treasury yields pulling back from recent highs to around 5.16% but rising again amid higher oil prices and renewed inflation concerns.

Fed expectations continue to favor the dollar, with officials saying the fight against inflation is not over and the market allowing for another rate increase as early as this autumn.