EUR/USD rallied to a 1-1/2-month high sharply away from the 10-day moving average on Monday, bolstering bulls' confidence as it cleared the daily cloud base and 50% Fibo of 1.2349-1.1704 fall, but technicals and the ECB meeting may lead to caution.
EUR/USD's rally to a high of 1.2048 on EBS was helped by the German 10-year yields DE10YT=RR hitting a 2-month high, falling euribor futures prices FEIM3 and U.S. 10-year yields US10YT=RR holding below old support-turned-resistance near 1.61%/1.62%.
But the ECB could mention euro strength and tightening financing conditions on Thursday with EUR/USD slightly higher than it was during the March 11 ECB meeting, German 10-year yields nearly 10bps higher and euribor prices having fallen close to March 11 levels.
Nearly overbought daily RSI, the daily cloud top, 61.8% Fibo of 1.2349-1.1704 and March 3 daily high are key technicals for EUR/USD bulls to focus on as they could halt further gains.
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