- EUR/USD sellers attack intraday low, stays mildly offered inside monthly triangle.
- Yields benefit from market anxiety ahead of the key central bank meeting, Omicron updates.
- US consumer-centric figures triggered market consolidation the previous day.
- ECB may vouch for APP requirements but the Fed’s verdict on tapering is more important to watch.
EUR/USD drops back to 1.1300, following the previous day’s corrective pullback heading into Monday’s European session. In doing so, the major currency pair drops 0.20% intraday while staying inside a short-term bearish chart formation at the latest.
The indecision over the next moves of the European Central Bank (ECB) and the US Federal Reserve (Fed) seems to restrict the EUR/USD prices of late. While the Market News Internation (MNI) cited sources to confirm further easy money policies at the ECB, Reuters’ poll eyes a reduction in the bond purchase from April. Adding to the confusion was ANZ report saying, “The ECB is expected to boost its monthly APP purchases as part of the transition from PEPP from next April onwards. It is expected that the ECB’s inflation forecast will show inflation below target in 2023, justifying guidance that rates won’t rise next year.”
On the other hand, the Fed hawks were recently poked by the US Consumer Price Index (CPI) data that matched 6.8% market forecasts to refresh the 39-year high. Also testing the Fed policymakers were stable inflation expectations revealed via the University of Michigan Consumer Sentiment Index, to 70.4 for December.
Above all, fears emanating from the South African covid variant, dubbed as Omicron, join financial market woes from China to put a floor under the US dollar and Treasury yields.
That said, the US 10-year Treasury bond coupons print mild gains of around 1.49% whereas the S&P 500 Futures rise 0.36% by the press time.
Given the anxiety ahead of the crucial events, coupled with a light calendar for Monday, the EUR/USD prices are likely to remain pressured amid firmer yields.
Technical analysis
A one-month-old ascending triangle bearish formation restricts short-term EUR/USD moves, between 1.1245 and 1.1380, with bullish MACD signals and a steady RSI line favoring the bulls.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
Australia CPI Preview: Inflation set to remain above target as hopes of early interest-rate cuts fade
An Australian inflation update takes the spotlight this week ahead of critical United States macroeconomic data. The Australian Bureau of Statistics will release two different inflation gauges on Wednesday.