EUR/USD eyes to regain 0.9800 amid fresh challenge to risk-of mood, yields, central bank in focus

EUR/USD renews its intraday high around 0.9790 amid the fresh decline in the US dollar heading into Thursday’s European session. In doing so, the quote pares the previous day’s losses, the biggest in two weeks, amid an absence of major data/events.

China’s debate on reducing quarantine time for international travelers seemed to have triggered the US dollar’s latest weakness amid a likely sluggish session. With this, the US Dollar Index (DXY) reverses the Asian session gains and prints 0.12% loss on the day as it refreshes intraday low to 112.77 at the latest.

Even so, the S&P 500 Futures print mild losses while staying around 3,700 by the press time.

Previously, US 10-year Treasury yields refreshed a 14-year high above 4.0%, around 4.15% by the press time while its two-year counterpart stays strong near the highest level since 2007, up 0.30% intraday near 4.57% at the latest.

It should be noted that the fears of higher inflation and the resulted aggressive rate hikes from the major central banks that previously propelled the US Treasury yields and the US dollar.

Moving on, a light calendar and a sudden shift in the risk profit could probe the EUR/USD from declining further. However, the recovery remains doubtful unless the yields start deteriorating and the DXY also ease, which is less expected.

Technical analysis

Unless staying below the weekly support line, now resistance around 0.9830, EUR/USD stays directed towards an upward-sloping trend line support from September 28, close to 0.9675 at the latest.