EUR/USD faces stiff barricades around 1.0700 due to weak Eurozone economic outlook
|- EUR/USD has retreated after facing barricades around 1.0700 amid a recovery in the USD Index.
- The German economy is going through a rough phase due to higher interest rates by the ECB.
- ECB Lagarde is expected to raise interest rates further considering persistence in core inflation.
The EUR/USD pair has witnessed some selling interest after facing stiff barricades around 1.0700 in the early European session. The major currency pair is consistently defending the crucial support of 1.0670, therefore, a breakdown of the same would result in wider bearish ticks. The Euro has come under pressure as investors are anticipating a bleak economic outlook in Eurozone.
S&P500 futures generated mild gains in the Asian session. US equities registered a positive settlement on Tuesday as more dovish catalysts are adding to Federal Reserve’s (Fed) interest rate policy filters. The US Dollar Index (DXY) has rebounded to near 104.18. On a broader note, the USD Index is inside the woods amid a lack of economic events this week.
The demand for US government bonds has improved amid a mild decline in hawkish Fed bets. As per the CME FedWatch tool, more than 80% of the chances are in favor of a steady interest rate policy. This has led to a decline in the 10-year US Treasury yields to near 3.66%.
On the Eurozone front, the German economy is going through a rough phase due to higher interest rates by the European Central Bank (ECB). The German economy has already shown a recession after a consecutive contraction in quarterly Gross Domestic Product (GDP). Adding to that, German Factory orders are consistently declining, indicating weak demand.
Apart from that, Eurozone Retail Sales data released on Tuesday also failed to stand expectations. Monthly Retail Sales remained stagnant while the street was anticipating an expansion by 0.2%. Annual Retail Sales contracted by 2.6% vs. the expectations of -1.8%. In spite of the poor economic outlook, ECB President Christine Lagarde is highly likely to raise interest rates further considering persistence in core inflation.
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.