EUR/USD appears firmer and approaches 0.9900, looks to Lagarde

EUR/USD adds to the positive start of the week near 0.9900.
The dollar continues to shed ground amidst declining yields.
ECB’s Lagarde participates in an event in Cyprus.

Pablo Piovano FXStreet

The optimism around the European currency remains well and sound and motivates EUR/USD to flirt with the boundaries of the key barrier at 0.9900 the figure on Tuesday.

EUR/USD up on risk-on mood, looks to Lagarde

EUR/USD adds to Monday’s uptick and approaches the 0.9900 region on the back of the continuation of the sell-off in the dollar and extra improvement in the risk-associated universe. The pair, therefore, enters the second consecutive week with gains after bottoming out near 0.9350 in late September.

The upbeat tone around the pair comes amidst further retracement in the German 10-year bund yields, which already tests the 1.80% region after hitting fresh multi-year peaks around 2.35% during last week.

In the docket, Producer Prices in the euro area will be the only release in the domestic calendar seconded by speeches by ECB’s A.Enria, L.De Guindos and C.Lagarde.

Across the Atlantic, Factory Orders will take centre stage, while FOMC’s Logan, Williams, Mester, Jefferson and Daly are all due to speak.

What to look for around EUR

EUR/USD keeps the strong recovery well and sound with the renewed target at the 0.9900 neighbourhood, always against the backdrop of the intense drop in the greenback.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. The latter has been exacerbated further following the latest rate hike by the Fed and the persevering hawkish message from Powell and the rest of his rate-setters peers.

Furthermore, the increasing speculation of a potential recession in the region - which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – adds to the sour sentiment around the euro

Key events in the euro area this week: Eurogroup Meeting, Germany, EMU Final Manufacturing PMI (Monday) – ECB Lagarde (Tuesday) – Germany Balance of Trade, EMU, Germany Final Services PMI (Wednesday) – Germany Construction PMI, EMU Retail Sales, ECB Accounts (Thursday) – Germany Retail Sales (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian post-elections developments. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is gaining 0.47% at 0.9870 and the breakout of 1.0032 (55-day SMA) would target 1.0050 (weekly high September 20) en route to 1.0197 (monthly high September 12). On the other hand, the next support appears at 0.9535 (2022 low September 28) ahead of 0.9411 (weekly low June 17 2002) and finally 0.9386 (weekly low June 10 2002).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold drops further; focus remains on $4,250

Gold adds to Monday’s pessimism and revisits the $4,260 region per troy ounce on Tuesday. The yellow metal’s extra weakness follows another positive day in the US Dollar, mixed US Treasury yields and steady pre-Fed caution.

Dogecoin clings to EMA support as recovery lacks conviction

Dogecoin (DOGE) hovers around $0.083 at the time of writing on Tuesday after finding support around the key support zone the previous day. Quiet institutional demand, along with mixed derivatives positioning, suggests fading interest in the dog-themed meme coin.

Markets slide as FOMC approaches

The US Dollar remains strong as markets turn increasingly cautious ahead of the FOMC. Stocks are tumbling, while Gold and Silver are moving lower under pressure from the stronger Dollar. The Japanese Yen is weaker again, while Crypto is correcting. BTC is approaching a key technical test and could fall below its 50-week moving average, while ETH remains above $2,405.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.