Is EUR/USD eyeing a downside break of 1.2150-1.2550 range?

• The EUR/USD continues to trade in the three-month range of 1.2150-1.2550.
• A downside break cannot be ruled out as the 10-year treasury yield looks set to scale the 3 percent mark.
• Eyes German and Eurozone preliminary PMI release.

The EUR/USD risks a downside break of the 1.2150-1.2250 trading range, courtesy of the widening US-German yield spread.

As of writing, the difference or the spread between the 10-year US-German yield stands at 238.8 basis points (bps) - the highest level since 1989. Meanwhile, the pair is trading at 1.2272, having clocked a low of 1.2249 on Friday.

Moreover, the spread will likely widen further in the USD-positive manner as the 10-year treasury yield is closing in on a big break above 3 percent. Further, the technical chart shows scope for a rally to 3.5-3.6 percent.

Focus on Eurozone PMI

If the preliminary PMIs (due today) print below estimates, then the investors will likely start pricing-in renewed dovishness from the ECB. The central bank is expected to keep rates unchanged this Thursday.

EUR/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "according to the 4 hours chart, the bearish potential is even clearer, as the pair has broken below all of its moving averages, with the shortest gaining downward strength above the larger ones, and technical indicators consolidating near oversold readings, with no signs of downward exhaustion. The daily ascendant trend line comes at 1.2240 for this Monday, while between 1.2240 and 1.2260, the pair has multiple relevant lows from these last few weeks, which means that a break of 1.2215, the low set early April is required to confirm a bearish extension ahead.

Support levels: 1.2250 1.2215 1.2180                                                                       

Resistance levels: 1.2300 1.2335 1.2375