Treasury yields pose risk to EUR/USD’s advance

Dollar has posed an ugly candle yesterday, as it was down almost 2% against Euro and similar move against other pairs.

• While European Central Bank's front loading of purchase pushed Euro from 1.132 to 1.089 against dollar, rumors of Greek deal has pushed it higher from 1.089 to 1.12. Since final deal is yet pending Euro is hovering around 1.115 against dollar.

Technically speaking, Dollar is likely to go down further after yesterday's massive push downwards and today's recovery can just be a dead cat bounce.

However, several challenges lie ahead for the pair.

• If possibility of a Greek deal has fuelled the move of EUR/USD, it might continue move sideways before any final agreement appears, which makes it vulnerable to dollar leg's movement.
  
• While Dollar was down heavily yesterday, rate hike expectations were not, which might once again push dollar higher. US 2 year treasury yields were almost unchanged yesterday, in spite of dollar drop. As of now hovering at 0.66%.

EUR/USD might move higher on Greek deal, but remains heavily exposed to US data risks unless the deal appears.