EUR/USD stays firmer above 1.1800 as risk-on mood weigh on USD, ECB’s Lagarde eyed
|- EUR/USD stays firmer for the second day in a row, edges higher of late.
- US President Joe Biden’s six-pronged strategy, Xi-Biden talks recently favored market sentiment.
- DXY part ways from firmer US Treasury yields, fails to cheer virus woes.
- German inflation data, US PPI eyed for immediate direction, risk catalysts and ECB’s Lagarde are the key.
EUR/USD extends the previous day’s recovery moves beyond 1.1800, recently edging higher around the intraday top of 1.1833 heading into Friday’s European session. In doing so, the major currency pair reacts to the US dollar weakness, mainly due to the recent positive risk appetite.
US President Joe Biden managed to offer a positive start to Friday’s Asian session with his six-pronged strategy speech. The mood got an extra boost of late with the first in seven months talks between Biden and his Chinese counterpart Xi Jinping brightened the mood.
Details suggest that the US side refrains from being too optimistic and term talks as ‘a a broad, strategic discussion’. On the other hand, Chinese media said, “Xi and Biden had a candid conversation on US-China ties.”
It should be noted that Biden’s push for vaccinations and masks join the UK’s approval for booster shots of the covid vaccines to add to the market’s slightly positive mood.
Probing the bulls is the Fed policymakers’ push for tapering as well as the coronavirus fears. Additionally, Australia’s readiness to tease China, by canceling the port agreement, also challenges the USD bears.
That said, the US Dollar Index (DXY) drops for the second consecutive day, down 0.05% around 92.47 by the press time, whereas the US 10-year Treasury yields rise 1.1 basis points (bps) to regain 1.31% levels. Further, the stock futures in the US and Europe also remain positive at the latest.
Having witnessed the European Central Bank’s (ECB) readiness to adjust all instruments to ensure inflation stabilizes at their 2% target over the medium term, today’s German Harmonized Inflation of Consumer Prices for August, expected to remain unchanged at 3.4%, may have a little importance for the EUR/USD traders. It’s worth noting that the comments from the ECB President Christine Lagarde, up for publishing around 09:30 AM GMT will be the key as the pair bulls will seek confirmation of the previous day’s cautious upbeat statements.
Additionally, the US Producer Price Index (PPI) data for August, expected 0.6% MoM versus 1.0% prior, will be important to watch for intermediate direction.
Technical analysis
Although 50-DMA triggered EUR/USD rebound, around 1.1800 at the latest, the pair buyers remain cautious until crossing the 1.1910 key hurdle, comprising a two-month-old horizontal area.
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