EUR/USD bears look to 1.1650 as USD hits nine-month high on sour sentiment
- EUR/USD drops to the fresh low since November 2020 on broad US dollar strength.
- Coronavirus, FOMC minutes underpin greenback’s safe-haven demand, DXY technical breakout adds fuel to rally.
- Fears of tapering, covid can keep bears hopeful, second-tier US data eyed for intermediate moves.
EUR/USD remains well-offered below 1.1700, down 0.32% intraday around 1.1670 heading into Thursday’s European session. The major currency pair bears the burden of the broad US dollar strength while refreshing the 2021 low.
The US Dollar Index (DXY) adds 0.32% on a day to poke November 2020 levels surrounding 93.50. The greenback gauge confirmed the double-top technical breakout earlier in Asia before crossing March 2021 top to favor the bulls.
In addition to the technical move, the market’s risk-off mood and the Fed’s tapering signals could also be blamed for the US dollar’s overall rally.
As per the latest updates, Virus infections in Australia jump to a fresh high since August 2020 and push New South Wales (NSW) to extend the local lockdowns to late August. New Zealand’s daily covid cases jump to 10 from 1 marked on Tuesday. On the same line, Reuters said, “The United States leads the world in reported COVID-19 cases and deaths. Daily U.S. cases soared from fewer than 10,000 in early July to more than 150,000 in August as the Delta variant took hold.”
On the other hand, the July Federal Open Market Committee (FOMC) Minutes shed the rate hike concerns, despite supporting the tapering, while also conveying the dissatisfaction of employment recovery among the policymakers.
It’s worth noting that the geopolitical tension surrounding Afghanistan also backs the DXY bulls, despite downbeat US Treasury yields. Also portraying the risk-aversion wave could be mildly offered S&P 500 Futures.
Given the Fed policymakers’ doubts over jobs figures, today’s US Jobless Claims for the week ended on August 13, expected 363K versus 375K, will be important. Also crucial will be the Philadelphia Fed Manufacturing Survey for August, forecast 23 versus 21.9 prior. Above all, risk catalysts will keep the driver’s seat and favor EUR/USD bears unless any positive surprises trigger USD pullback.
Technical analysis
A downward slopping trend line from June 18 challenges EUR/USD bears around 1.1655 before directing them to the late 2020 bottom surrounding 1.1600. Alternatively, sustained trading beyond 1.1700 becomes necessary to convince buyers.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
