EUR/USD braces for fresh multi-year low around 0.9600, ECB’s Lagarde, Fed’s Powell eyed

EUR/USD holds lower grounds around the yearly bottom marked on Monday, despite picking up bids to 0.9600 during Wednesday’s Asian session, as risk-aversion intensifies. Also exerting downside pressure on the major currency pair could be the fears of more pain in terms of the energy supplies to the old continent, as well as the firmer US data.

Multiple leaks in Russia’s gas pipeline in the Baltic Sea raise woes that the Eurozone’s energy supply problems are likely to be permanent. The same intensify fears of recession inside the bloc, especially amid an absence of impressive data and inflation fears.

With this, the hawkish comments from the European Central Bank (ECB) policymakers failed to impress EUR/USD bulls. ECB Vice President Luis de Guindos said on Tuesday that they will continue to raise rates over the coming months and added that the number and size of the hikes will be determined by the data, as reported by Reuters. "We are facing an overlapped succession of shocks that have changed the context in a significant way," ECB Governing Council member Mario Centeno said and noted that the interest rate increase cycle will continue.

On the other hand, firmer US Durable Goods Orders and CB Consumer Confidence data joined hawkish Fedspeak to impress the greenback buyers. US Durable Goods Orders declined by 0.2% in August versus the market forecasts of -0.4% and the revised down prior reading of -0.1%. The Nondefense Capital Goods Orders ex Aircraft, however, improved by 1.3% during the stated period compared to 0.2% expected and 0.3% previous readouts. Additionally, US CB Consumer Confidence improved for the second consecutive month to 108.00 for September versus 104.5 expected and 103.20 prior.

"At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy," Chicago Fed President Charles Evans said on Tuesday, as reported by Reuters. St. Louis Federal Reserve Bank President James Bullard said on Tuesday that they have a serious inflation problem in the US, as reported by Reuters. "More rate rises to come in future meetings." Minneapolis Fed President Neel Kashkari said the central bank is moving "very aggressively," and there is a high risk of "overdoing it." 

It’s worth noting that the rally in the global bond yields, led by the UK’s gilt, joined downbeat equities to add strength to the bearish bias for the EUR/USD pair.

Moving on, a lack of major data/events could keep the EUR/USD weakness continued amid the prevailing fears for the bloc and the market’s rush for risk safety. However, speeches from ECB President Christine Lagarde and Fed Chair Jerome Powell may entertain the pair buyers if they speak about matters relating to the monetary policy.

Technical analysis

EUR/USD sellers poke the year 2001 peak surrounding 0.9590 to aim for the support line of a six-month-old bearish channel, at 0.9475 by the press time.