- EUR/USD fades late Friday’s corrective bounce amid sour sentiment.
- Headlines surrounding banking sector, nuclear fears from Russia weigh on risk appetite.
- Mostly upbeat EU data, hawkish ECB talks previously allowed Euro to pare some losses.
- Inflation numbers from EU/Germany, US Core PCE Price Index will be crucial to watch for fresh impulse.
EUR/USD retreats towards 1.0750 as it consolidates the previous weekly gains amid a cautious mood in the market ahead of the key inflation data from Europe and the US. That said, the Euro pair eases from its intraday high to 1.0765 during early Monday in Asia while fading the late Friday’s corrective bounce.
Fears of more banking sector fallout and Russia’s likely usage of nuclear weapons in its war with Ukraine join the hawkish central bank talks to challenge the risk profile. It’s worth noting, however, that the US Dollar managed to pare some of its latest losses despite the downbeat Treasury bond yields. The recent rebound in the greenback could be linked to the slightly positive US data and hopes of faster rate hikes by the Federal Reserve (Fed). However, the hawkish tone of the European Central Bank officials and an absence of disappointing numbers from the bloc allowed the EUR/USD pair to post weekly gains in the last.
The North Atlantic Treaty Organization (NATO) NATO on Sunday criticised Vladimir Putin for what it called his "dangerous and irresponsible" nuclear rhetoric, a day after the Russian president said he planned to station tactical nuclear weapons in Belarus, per Reuters.
Elsewhere, the preliminary readings of Eurozone S&P Global PMIs for March showed that the Manufacturing gauge arrived at 47.1 versus 49.0 expected and 48.5 prior but the Services PMI rose to a fresh 10-month high of 55.6 while rising from 52.7 prior and 52.5 expected. As a result, the Composite PMI also rose to a 10-month top of 54.1 versus 51.9 market forecasts and 52.0 previous readings.
On the same line were the first readings of Germany’s S&P Global/BME PMIs for March as the Manufacturing gauge dropped to a two-month low of 44.4 versus 47.0 expected and 46.3 prior but the Services PMI rose to 53.9 during the stated month from 50.9 prior and 51.1 expected. Further, the Composite PMI refreshed a 10-month high with the 52.6 figure for March versus 51.0 expected and February’s 50.7.
On the other hand, US Durable Goods Orders for February dropped by 1.0% versus January's fall of 5% (revised from -4.5%) and the market expectation for an increase of 0.6%. Details suggested that the figure for Durable Goods Orders ex Defense and ex Transportation were also downbeat but Nondefense Capital Goods Orders ex Aircraft came in firmer-than-expected 0.0% to 0.2%, versus 0.3% prior.
Further, the preliminary readings of the US S&P Global PMIs for March came in firmer as the Manufacturing gauge rose to 49.3 from 47.3 in February, versus 47.0 expected, while Services PMI rose to 53.8 from 50.6 prior and 50.5 expected. With this, the S&P Global's Composite PMI increased to 53.3 from 50.1 in February, versus 50.1 market forecasts.
Talking about the central bankers’ comments, On Friday, Atlanta Fed President Raphael Bostic told NPR that it was not an easy decision to raise the policy rate while also adding that he is not expecting the economy to fall into recession. "Fed has to get inflation under control,” said Fed’s Bostic.
Further, St. Louis Federal Reserve President James Bullard, a policy hawk, said on Friday that the response to the bank stress was swift and appropriate, allowing the monetary policy to focus on inflation, per Reuters. The policymaker also added that the projections suggest one more rate hike that could be at the next FOMC meeting or soon after. It should be noted that the latest comments from Minneapolis Fed President Neel Kashkari seem to weigh on the US Dollar as he said during CBS show Face the Nation that recent stress in the banking sector and the possibility of a follow-on credit crunch brings the US closer to recession.
In the case of the ECB officials, ECB President Christine Lagarde told EU leaders on Friday that the Euro area banking sector is resilient with strong capital and liquidity positions, Reuters reported citing EU officials. “ECB is determined to bring back inflation to 2%, will decide on future rates based on incoming data,” added ECB’s Lagarde. On the same line was Eurogroup President Paschal Donohoe who said that European banks have enough capital and liquidity. Further, ECB policymaker Joachim Nagel said on Friday, “It will be necessary to raise policy rates to sufficiently restrictive levels in order to bring inflation back down to 2% in a timely manner.” During the weekend, ECB Board Member Isabel Schnabel said that while headline inflation has begun falling, the core is sticky.
Amid these plays, Wall Street closed with mild gains after late Friday’s losses while the yields bounce off weekly lows.
Looking ahead, IFO numbers for Germany will join the comments from the ECB and the Fed officials to direct the EUR/USD pair’s intraday moves. However, major attention will be given to the inflation data from Germany and Europe. On the other hand, the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, will be important to track for clear direction.
Although a downside break of a short-term support line, now resistance around 1.0855, teases EUR/USD bears, the 50-DMA support around 1.0725 challenges the quote’s further downside.
Additional important levels
|Today last price||1.0766|
|Today Daily Change||0.0006|
|Today Daily Change %||0.06%|
|Today daily open||1.076|
|Previous Daily High||1.0839|
|Previous Daily Low||1.0714|
|Previous Weekly High||1.093|
|Previous Weekly Low||1.0631|
|Previous Monthly High||1.1033|
|Previous Monthly Low||1.0533|
|Daily Fibonacci 38.2%||1.0762|
|Daily Fibonacci 61.8%||1.0791|
|Daily Pivot Point S1||1.0702|
|Daily Pivot Point S2||1.0645|
|Daily Pivot Point S3||1.0577|
|Daily Pivot Point R1||1.0828|
|Daily Pivot Point R2||1.0896|
|Daily Pivot Point R3||1.0953|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD stays below 1.0700 as USD gathers strength
EUR/USD continues to trade in negative territory below 1.0700 on Wednesday. Higher-than-expected increase in US JOLTS Job Openings for April provides a boost to the US Dollar and weighs on the pair as investors keep a close eye on US debt-limit news.
GBP/USD struggles to recover above 1.2400
GBP/USD has lost its traction and declined below 1.2400 after having climbed above that level earlier in the day. The pair struggles to gather recovery momentum as the US Dollar holds its ground after strong employment data. Markets await House vote on debt-limit bill.
Gold extends daily rebound beyond $1,970
Gold price has gained traction and advanced above $1,970 in the second half of the day on Wednesday. The benchmark 10-year US Treasury bond yield stays in negative territory and allows XAU/USD to keep its footing. Market mood remains cautious ahead of the debt-ceiling vote.
Ethereum holders pull $1 billion in ETH off exchanges hinting retail-led rally
Ethereum holdings in exchange wallets declined by $1.04 billion between May 8 and May 31. Interestingly, while large wallet investors have shed their Ether holdings, the altcoin got redistributed to addresses with less than 1 ETH.
C3.ai Stock News: After 33% rally, AI shares backtrack ahead of earnings
C3.ai (AI) stock slipped 7.6% to $41.62 in Wednesday’s premarket ahead of quarterly earnings expected after the close. This may just be traders taking profits after Tuesday’s 33.4% surge in the AI stock price.