Besides stretched euro long positions being trimmed, it is tough to pick at reasons to be bullish the single currency against the dollar at this moment in time.
The vaccine/recovery divergence story is arguably one of the key factors but also with the Fed allowing a steeper for longer narrative and the ECB not willing to pursue that path (Lagarde yesterday even challenged the market to do so), yields differential is another key factor to consider in all of this - especially if there are signs of inflation picking up.
The gap between 10-year Treasury and German bund yields have grown from 148 bps at the end of December to roughly 202 bps currently.
Besides that, the technical environment also isn't helping after having seen EUR/USD break below 1.1800 and falling below its 200-day moving average.
Sellers have kept near-term control and driven price lower over the past two weeks, with the 100-hour moving average (red line) helping to limit upside so far this week.
The only comfort for buyers is that price is still holding above 1.1700 for now but amid the noise associated with month-end, quarter-end and also the upcoming Easter holidays, it may be tough to get a clear signal until next week perhaps.
That said, as long as price holds below the 100-hour moving average @ 1.1752 currently, then sellers are still well in control of the price bias.
The second layer of defense falls closer towards 1.1800 and that is arguably a key psychological level, adding to the 200-hour moving average (blue line) @ 1.1801.
As long as sellers hold that, buyers will have their work cut out in trying to turn sentiment in the pair to their favour instead.
Otherwise, as things continue to go down this path, we may likely see EUR/USD trend towards the September and November lows near 1.1600 before finding a proper base.