The EUR/USD pair turned north on Wednesday, but it must be said that the rally was fueled by broad selling pressure around the greenback rather than renewed euro strength.

After the U.S. Bureau of Labor Statistics announced that the core consumer price index (CPI) in the U.S. was unchanged at 4% on an annualized basis in September, U.S. government bond yields began to fall. As the yield on 10-year US Treasuries fell by almost 3%, the greenback struggled to find demand and EUR/USD gained almost 70 points on a daily basis on Wednesday.

However, the 10-year US Treasury yield is holding above the critical 1.5% level on Thursday, and as long as this level holds, the dollar could regain its strength and limit EUR/USD’s upside.

On the flip side, another USD sell-off could be in store if the 1.5% level fails. Still, it is difficult to bet on a prolonged EUR/USD recovery as the FOMC meeting minutes once again reiterated policymakers’ intention to start reducing asset purchases as early as November.

Later in the day, the weekly Initial Jobless Claims and Producer Price Index for September (PPI) from the U.S. Department of Labor are on the U.S. economic calendar and are unlikely to trigger any significant reaction.

EUR/USD is currently trading above the psychological 1.1600 level and approaching the 1.1620 level, where the 23.6% Fibonacci retracement of the downtrend that started in early September is located. The 100-period SMA level on the four-hour chart also reinforces this resistance. If buyers manage to turn this level into support, the next target on the upside could be 1.1670 (Fibonacci 38.2% retracement) ahead of the 1.1700/10 area (psychological level, Fibonacci 50% retracement, 200-period SMA).

Initial support is now at 1.1570 (50-period SMA) ahead of 1.1525 (15-month low) and 1.1500 (psychological level).

It is also worth noting that the Relative Strength Index (RSI) is approaching the overbought zone, suggesting that the pair may decline slightly before the next upward move.