EURUSD falls towards 1.0850 as the US dollar tracks yields

EURUSD clings to minor losses near 1.0890, erasing week-start gains in a sluggish session.

The EURUSD is trading at 1.0890-85 as the bulls take a breather amid a light calendar and mildly negative sentiment on early Tuesday. The Euro pair’s recent decline could also be linked to a rebound in US Treasury bond yields. Which allows the US Dollar to pare its week-start loss ahead of secondary data.

Despite downbeat Fed bets and weaker US data, the US dollar is tracking the recovery in yields.

The US Dollar Index (DXY) is up slightly around 102.20 after falling the most since March 22 the day before. As a result, the dollar index versus the six major currencies has recovered from a one-week low. However, the US 10-year and two-year Treasury bond yields are licking their wounds at 3.42% and 3.98%, respectively, after printing a four-day and two-day downtrend.

Russia’s indirectly warns the Eurozone, weighing on the Euro, while renewed US-China tensions allow the USD to lick its wounds.

Geopolitical issues involving Russia and China all weighed on the EURUSD price. Nonetheless, the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia, known as OPEC+, announced a surprise output cut on Monday, raising inflation concerns. However, US Vice President Joe Biden dismissed the OPEC+ move, claiming that it is not as bad as you think. However, US Federal Reserve Board Governor Lisa Cook, as well as US Treasury Secretary Janet Yellen, have expressed concern about higher inflation and global growth challenges.

In other news, Russian Foreign Minister Sergei Lavrov raised concerns about the escalation of the Moscow-Brussels spat by declaring that “the European Union (EU) has “lost” Russia.” The policymaker also stated that Moscow will deal with the situation. If necessary, we will deal harshly with Europe. Furthermore, US-China tensions are on the table, as Beijing continues to express its displeasure with US-Taiwan ties while Washington appears to ignore it.

Among these bets, the S&P 500 Futures are halting a four-day uptrend near the highest levels since February 16.

Following that, the Eurozone Producer Price Index (PPI) for February will be released ahead of the US Factory Orders for the same month, directing intraday EURUSD movements. However, following the recent escalation of geopolitical woes, major attention will be paid to risk catalysts, which may allow the Euro pair to ease.

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