- EUR/USD struggles to extend Monday’s gains, seesaws around one-week top.
- Comments from US Treasury Secretary Yellen, inflation expectations probe the pair buyers.
- ECB hawks battle with the bears amid risk-on mood but recession woes keep buyers away.
- October’s ZEW Sentiment figures for EU/Germany will offer immediate directions, risk catalysts are more important.
EUR/USD treads water at the eight-day high, recently retreating to 0.9840, as buyers seek more clues to extend the previous day’s run-up during Tuesday’s Asian session. As a result, today’s European and German ZEW data for October will be important for fresh impulse amid a light calendar elsewhere.
The major currency pair’s latest inaction could be linked to a mixed play between the risk-on mood and the hawkish Fed speak. Also challenging the EUR/USD traders is a light calendar in the US.
On the positive side, Germany’s rejection of recession fears and hawkish comments from the European Central Bank (ECB) policymakers favor the pair buyers. Additionally, the broad US dollar weakness due to the receding concerns of the UK’s market collapse also fuels the EUR/USD prices. Furthermore, downbeat US data adds strength to the upside momentum. That said, NY Empire State Manufacturing Index for October dropped -9.5 versus -4.0 expected and -1.5 prior.
Alternatively, hawkish Fed bets and fears of market intervention in Japan and China seem to challenge the EUR/USD buyers. That said, CME’s FedWatch Tool prints a nearly 95% chance of a 75 bps Fed rate hike in November. In doing so, the tool might have taken clues from upbeat comments from US Treasury Secretary Janet Yellen, suggesting a strong US jobs market, as well as upbeat US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data.
It should be noted that China’s zero-covid policy, delaying of the key data/events and determination to defend the might of taking control in Hong Kong and Taiwan also challenge the pair’s upside momentum.
Amid these plays, S&P 500 Futures track Wall Street’s gains but the US 10-year Treasury yields retreat to 3.99%, probing the US Dollar Index (DXY) bears of late.
Looking forward, downbeat expectations from Germany’s ZEW figures for October contrast with the likely improvement in the Eurozone sentiment index, which may trouble the EUR/USD traders and EUR/USD traders and can allow the intraday sellers to sneak in. However, significant attention will be given to the risk catalysts for precise directions.
Technical analysis
A daily closing beyond the 21-DMA, around 0.9780 by the press time, directs buyers towards a five-week-old resistance line, close to 0.9880 at the latest.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.