EUR/USD slides closer to 1.20 mark ahead of US ISM PMI

   •  Persistent USD buying interest/surging US bond yields keep exerting downward pressure.
   •  The US ISM manufacturing PMI to help traders grab some short-term opportunities.

The EUR/USD pair extended its bearish slide on Tuesday and dropped to fresh 3-1/2 month lows in the past hour, albeit recovered few pips thereafter.

Against the backdrop of last week's dovish ECB outlook, resurgent US Dollar demand, further boosted by a goodish pickup in the US Treasury bond yields, has been one of the key factors weighing heavily on the major. 

Adding to this, possibilities of some fresh technical selling below the 1.2060-50 horizontal support seems to have further aggravated the downfall since the early European session. 

Despite the prevailing bearish sentiment, the pair seems to have found some support ahead of the very important 200-day SMA and the key 1.20 psychological mark as traders now look forward to the release of US ISM manufacturing PMI for some fresh impetus. 

The key focus, however, will remain on Wednesday's FOMC announcement and the keenly watched US NFP report on Friday, which should help determine the pair's near-term trajectory.

In the meantime, a convincing breakthrough the mentioned support is likely to pave the way for an extension of the pairs downfall back towards January lows support near the 1.1915 region.

Technical outlook

“The Momentum indicator lags, as the current candle opened higher, heading nowhere below its mid-line, but the RSI already accelerated south, currently at 22, all of which supports additional declines ahead toward the 1.2000 figure,” writes Valeria Bednarik, FXStreet's own American Chief Analyst.

She further adds: “Still, is not impossible and if the level gives up, 1.1960 comes next. The low set at 1.2054 last week is the immediate resistance, en route to 1.2100.”