- EUR/USD keeps bounce off eight-day low but struggles to hold 1.2100.
- Fed’s Powell tried to play nice with cautious optimism despite conveying economic uncertainty.
- Bears haven’t forgot ECB policymakers’ dovish comments, EU-UK tussle over vaccine.
- European Consumer Confidence, German inflation and US Jobless Claims can also entertain traders.
EUR/USD retraces from the monthly low while taking rounds to 1.2110-05 amid the initial Asian session on Thursday. The currency major dropped to the lowest since January 18 the previous day as dovish comments from Dutch Governor and the Fed’s downbeat appearance weighed on the risks, favoring the US dollar. Although Fed Chairman Jerome Powell tried to placate the bears, the EUR/USD traders are waiting for the first reading of the US Q4 GDP for further direction.
ECB Governing Council Member and Dutch Governor Klass Knot struck bold comments suggesting the bloc’s central bank’s readiness to go ahead with further negative rates if needed. The news weighed down the regional currency across the board amid downbeat economics and worsening virus conditions at home.
On the other hand, the US Federal Reserve also marked spoke dovish while keeping the benchmark Fed rate and asset purchases unchanged, as expected. However, the central bank’s statement conveying the moderate pace of US economic activity and employment exerted an additional burden on the risks. While trying to keep the traders hopeful, Fed Chair Powell cited hopes of economic recovery despite initially conveying economic uncertainty and showing readiness to act.
Read: Powell speech: Jury is out on whether there will be economic scarring
It should be noted that tensions between the European Union (EU) and the UK grow recently over AstraZeneca’s inability to match the vaccine supply commitment. In the latest development, the bloc demands UK covid vaccines from the drugmaker to make up the shortfall, per Financial Times.
Amid these plays, markets in Europe and the US turned red on Wednesday while the US dollar index (DXY) benefited from the risk-off mood and poked the monthly high, marked on January 18.
Looking forward, US preliminary readings of the Q4 GDP, expected 3.9% versus 33.4% prior, will be the key to watch as EUR/USD traders would like to confirm the Fed’s dovish appearance. Ahead of it, European Consumer Confidence for January, likely to remain unchanged at -15.5, as well as Germany’s Harmonized Index of Consumer Prices for January, anticipated to recover from -0.7% YoY to +0.5%, can also entertain the pair traders.
Technical analysis
50-day EMA restricts immediate downside around 1.2100 but 1.2050 will be the key support comprising lows marked since December 09. As a result, a corrective pullback can eye for last Friday’s top near 1.2190.
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
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.