EUR/USD Ticks Higher as Investors Favour Currencies with Better Fiscal Discipline

The EUR/USD forecast is mildly positive due to investors favoring currencies of economies with better fiscal discipline and lower debt levels. The recent flight to quality has seen investors prefer gold over stocks, while in the FX space, countries with a better fiscal position have outperformed those with high debt levels.

However, the steady climb in bond yields across developed economies, particularly in the US, remains a concern. The US Treasury's announcement of increased long-dated Treasury buybacks has had an impact on the FX and crypto markets, but bond yields have returned to pre-announcement levels after their initial dip.

The EUR/USD technical analysis suggests that the break of the bear trend and subsequent upside follow-through have turned bullish. Key support now sits at around 1.1600 area, inside the broader 1.1575 to 1.1625 range. The upper end of this range is where the 200-day average comes into play.