EUR/USD: into a sideways drift for US close after major Chinese induced turbulence

• EUR/USD closing in 1.1950's after opening near the 200-hour SMA in NY on Chinese treasury news.
• EUR/USD now awaits domestic data releases for next major moves.

, EUR/USD is closing up in the US session and entering early Asia around the midpoint of the 1.19 handle after a turbulent session in the European shift what with the Chinese news.

There has been some noise, albeit highly significant noise, that Chinese officials recommended slowing or halting buying of US Treasuries forcing a knee-jerk rally in the single currency on a sell-off in the greenback to 1.2018 highs.

The impact was forcing a break below 92 in the DXY to 91.92. However, there was a turn around back to 91.41 when US rates rallied higher with the benchmark treasury yields extending on break of a thirty-year-long downtrend on the Bloomberg report that claimed unnamed China officials had recommended slowing or halting purchases of US treasuries. (US 10yr treasury yields rose from 2.54% to 2.60% - the highest since March 2017).

Into the close of the NA session, the 10yrs yield dropped back to 2.56%. the 2yr treasury yields rallied from 1.96% to 1.98% before decaying back to currently at 1.97%. Fed fund futures priced the chance of another rate hike in March at 68%.

EUR/USD awaits key data releases

While there was nothing compelling data wise from the US while all eyes look ahead to EU releasing November industrial production data and the US publishing December PPI ahead of US CPI and retails sales, there was one Fed speak with Dallas Fed President Robert Kaplan speaking. Kaplan is expecting the Fed to hike rates three more times concerned about the US economy overheating. 

EUR/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that, from a technical point of view, the Fibonacci levels in EUR/USD have been playing well:

"The early rally was contained by the 23.6% retracement of the latest weekly bullish run, while the following decline stalled at the 38.2% retracement of the same rally, a couple of pips below the current level and the immediate support. 

The bullish momentum faded and the pair is again at risk of falling, as in the 4 hours chart, it briefly traded above a bearish 20 SMA, now back below it, while technical indicators corrected extreme oversold conditions, but failed to regain bullish territory, now heading back south below their mid-lines. The pair is barely up daily basis, and at this point, would need to break below 1.1910, the next Fibonacci support, to confirm another leg lower ahead."