EUR/USD eyes further losses below 1.1300 on USD rebound, US data eyed
|- EUR/USD refreshes intraday low while snapping two-day uptrend.
- Cautious mood recalls USD buyers ahead of the key data, ignoring downbeat yields.
- US inflation expectations recover, ECB policymakers stay divided on next move.
- Final reading of the US Q3 GDP, CB Consumer Confidence for December becomes the key data, Omicron, BBB also in focus.
EUR/USD takes offers to renew intraday low near 1.1270 heading into Wednesday’s European session.
The major currency pair rose during the last two days amid optimism concerning the US stimulus and Omicron. However, fears of worsening virus cases, geopolitical challenges and fiscal stimulus updates weigh on the market sentiment ahead of this week’s key US data.
US President Joe Biden’s expectations of getting the “Build Back Better (BBB)” plan done as well as vaccine/treatment optimism faded after European economies announced fresh virus-linked activity restrictions. Adding to the bearish bias were recently recovering inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.
Additionally, news that the US appoints a new Tibet Coordinator amid tensions with China joins the tension with Russia to weigh on the risk appetite and underpin the US dollar’s safe-haven demand.
On the contrary, indecision amid the European Central Bank (ECB) policymakers over the inflation stance, versus the Fed’s clear view, weigh on the EUR/USD prices. Recently, ECB policymaker and Slovak central bank Governor Peter Kazimir said, “There is a risk that elevated inflation will stay for a longer time.”
Against this backdrop, the US 10-year Treasury yields dropped two basis points (bps) to 1.465% whereas the S&P 500 Futures decline 0.13% intraday even as the Wall Street benchmarks snapped a three-day downtrend. Further, the US Dollar Index (DXY) snaps a two-day downtrend to gain, up 0.12% intraday around 96.55 at the latest.
It’s worth noting that a lack of market moves during the year-end holiday season may restrict short-term EUR/USD prices even as the bears keep the controls. That said, Omicron updates and US stimulus chatters could entertain traders ahead of the US final Q3 GDP and the CB Consumer Confidence for December.
Read: Conference Board Consumer Confidence December Preview: Where do Americans turn for optimism?
Technical analysis
Repeated failures to cross the 21-DMA, around 1.1290 by the press time, directs EUR/USD sellers towards an ascending support line from November 24, at 1.1230.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.