EUR/USD Recovery Looks Fragile as Bond Market Weakness Persists

The recent recovery in EUR/USD appears increasingly fragile, with bond market dynamics and underlying dollar strength threatening to reverse recent gains. The pair's bounce has lacked conviction, and analysts note that the recovery in both bonds and EUR/USD may not be sustainable given current macro conditions. USD/JPY continues to benefit from yield differentials, while USD/CAD also remains in focus as the greenback holds firm against commodity-linked currencies. The US Dollar Index futures suggest the broader dollar trend remains constructive, with buyers likely to re-engage on any pullbacks. Bond market weakness, driven by persistent inflation concerns and elevated Treasury yields, continues to underpin the dollar and cap EUR/USD upside. Technical indicators suggest that unless EUR/USD can decisively break above near-term resistance levels, the pair risks revisiting recent lows. Traders should remain cautious on long euro positions, as the combination of fragile bond market recovery and resilient US economic data could reignite dollar buying pressure in the near term.