EUR/USD tumbles to lows, 1.22 mark at risk

   •  Goodish USD rebound prompts heavy profit-taking. 
   •  Final EZ CPI print does little to influence the momentum.
   •  US manufacturing data eyed for some trading impetus.

The EUR/USD pair extended its retracement from fresh 3-year highs and has now moved on the verge of breaking below the 1.2200 handle.

A fresh leg of upsurge in the US Treasury bond yields remained supportive of the shallow US Dollar bounce and has been one of the key factors behind the pair's sharp retracement of around 120-pips from levels beyond the 1.2300 handle.

The bearish fall could also be attributed to some cross-driven weakness, with the EUR/GBP cross facing rejection near the 0.8900 handle (100-day SMA) and exerting heavy downward pressure on the core pair.  

Meanwhile, the market had a rather muted reaction to today's mostly in-line final EZ CPI print, with the latest German political breakdown, accompanied with the recent jawboning by ECB policymakers, dampening sentiment surrounding the shared currency.

Next on tap would be the release of industrial production and capacity utilization data from the US, which would be looked upon for some short-term trading impetus.

Technical levels to watch

A convincing break through the 1.2200 handle is likely to accelerate the slide towards 1.2125 intermediate support en-route the 1.2100 handle and 1.2085-80 strong horizontal support. On the upside, any up-move might now confront fresh supply near the 1.2235-40 region, above which the pair is likely to make a fresh attempt to conquer the 1.2300 handle.