EUR/USD flat for the week, rebounds back above 1.0200 as US yields slide

The EUR/USD printed a fresh daily low during the American session at 1.0145 and then rebounded back above 1.0200, amid lower US yields and higher equity prices in Wall Street.

Lower US yields keep USD limited

Data released on Friday in the US showed larger-than-expected increases in consumer spending and personal income. At the same time, the Core PCE showed inflation is not pulling back. US yields initially rose but then declined. Near the end of the week, the US 10-year yield is at 2.63%, the lowest since April.

The yields slide weighed on the greenback, which lost momentum and pulled back, sending EUR/USD back above 1.0200. In Wall Street, equities were in positive ground, about to end the best month since 2020.

After a busy week in terms of economic data, the key event for next week is the US official employment report on Friday, with market consensus expecting an increase in payrolls by 250K. “Employment likely continued to advance firmly in July but at a more moderate pace after four consecutive job gains at just below 400k in March-June. High-frequency data, including Homebase, still point to above-trend job creation,” mentioned analysts at TD Securities.

Still sideways

Despite all the data and the FOMC meeting, EUR/USD continues to trade sideways (as it has been since July 18), holding above 1.0100 and unable to make a clear break above 1.0260.

“A break below 1.0105 will open doors for a retest of parity, while below the latter, fresh multi-decade lows could be expected, with the main bearish target at 0.9880. The pair needs to accelerate through 1.0280 to shrug off the negative stance and extend its recovery towards 1.0360 and en route to 1.0440,” explains Valeria Bednarik, Chief Analyst at FXStreet.

Technical levels