EUR/USD clings to modest intraday gains, upside seems limited

• EUR/USD managed to regain positive traction during the Asian session on Tuesday.
• Retreating US bond yields weighed on the USD and remained supportive of the uptick.
• Investors look forward to US Retail Sales for some impetus ahead of the FOMC meeting.

The EUR/USD pair extended its sideways consolidative price action through the Asian session on Tuesday and remained confined in a narrow trading band, below mid-1.1900s.

Having found some support ahead of the 1.1900 mark, the pair edged higher during the first half of the trading action and for now, seems to have snapped two consecutive days of the losing streak. A modest pullback in the US Treasury bond yields kept the US dollar bulls on the defensive, which, in turn, extended some support to the EUR/USD pair.

In fact, the yield on the benchmark 10-year US government bond retreated from the highest level in more than a year amid expectations that the Fed could take some action to curb the recent sharp rise in long-term borrowing cost. Hence, the market focus will remain on the outcome of a two-day FOMC policy meeting, starting this Tuesday.

The uptick, however, lacked bullish conviction or any strong follow-through buying amid concerns about the suspension of the Oxford/AstraZeneca coronavirus vaccine in several European nations. Germany, France and Italy temporarily halted the rollout of the vaccine following reports about possible serious side-effects.

Investors might also refrain from placing aggressive bets, rather prefer to wait on the sidelines ahead of this week's key central bank event risk. This makes it prudent to wait for some strong follow-through buying before positioning for any meaningful intraday appreciating move amid absent relevant economic data from the Eurozone.

Meanwhile, the US economic docket highlights the release of monthly Retail Sales figures later during the early North American session. This, along with the US bond yields, might influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the EUR/USD pair.

Technical levels to watch