EUR/USD remains stable at approximately 1.1675 during the early hours of Wednesday’s Asian session. US Treasury buybacks may exert downward pressure on the US Dollar, as traders prepare for the US PCE data to provide new momentum. The United States has issued a warning of imposing stringent sanctions on nations that maintain economic relationships with Iran. The EUR/USD pair remains stable around 1.1675 during the early Asian trading hours on Wednesday. The US Treasury’s decision to expand its long-term bond buyback program could exert downward pressure on the US Dollar against the Euro. Traders are anticipating the forthcoming release of the US Personal Consumption Expenditures Price Index data, scheduled for late Wednesday.
US Treasury Secretary Scott Bessent indicated last week that the government might elevate bond buybacks beyond $4 billion, following the department’s announcement to double buybacks of longer-dated securities. CNBC reported earlier on Monday that Bessent could utilise the department’s nearly $1 trillion General Account to facilitate bond buybacks, rather than resorting to the issuance of short-term bills. “Lower bond yields at the long end won’t fix the debt problem. In the longer term, it may exacerbate the situation. The government’s debt burden would become even more sensitive to changes in the Fed’s policy rate,” stated Brian Jacobsen. However, escalating tensions in the Middle East could enhance safe-haven flows, thereby bolstering the Greenback. The US has issued a warning regarding the potential imposition of severe sanctions on any country or entity that continues to maintain economic ties with Iran.
Meanwhile, Tehran pledged to respond to any nation involved in the US-led isolation efforts. Strategists observe that the “recent recovery in yield spreads has provided fundamental support to the Euro,” contributing to the strength of EUR performance. However, they caution that they “see little scope for additional near-term strength as spot currently trades with a slight premium to our narrow fair value estimate at 1.1622,” suggesting the currency may struggle to extend gains meaningfully from current levels. In the daily chart, EUR/USD maintains a bullish near-term bias as the spot price remains above the 100-day simple moving average and the Bollinger middle band.
Price is approaching the upper band of the Bollinger Bands, with the Relative Strength Index (14) hovering around 70, indicating overbought conditions that may limit short-term gains, despite the overall structure remaining supported. On the downside, initial support is situated in the 1.1580/1.1575 range, where the Bollinger middle band and the 100-day SMA converge to strengthen an underlying floor, preceding a more substantial structural level at the Bollinger lower band around 1.1456. On the topside, a clear break above the Bollinger upper band resistance at 1.1708 would reopen the path for further gains; however, stretched momentum indicates that rallies toward this barrier may invite profit-taking.
