EUR/USD grinds higher past 1.0800 as easing bank, inflation fears weigh on US Dollar

EUR/USD bulls take a breather around the intraday high of near 1.0815 as traders seek more clues to extend the two-day run-up during early Tuesday. It’s worth noting that the comparatively upbeat catalysts from Eurozone versus the US joined the risk-on mood to underpin the Euro pair’s latest run-up.

Recently, US Treasury Department said that the US will keep using tools to prevent banking contagion as needed.  Before that, Federal Reserve Governor Philip Jefferson and Fed Vice Chair for Supervision Michael Barr showed readiness to tame the banking crisis while signaling ease in the inflation woes.

On the other hand, European Central Bank (ECB) policymaker Pablo Hernandez de Cos, Gediminas Šimkus, Isabel Schnabel and Mario Centeno were the latest officials who tried to convince markets of easing recession fears in the bloc, as well as hopes of overcoming the banking crisis. It’s worth noting, however, the Fed policymakers appeared slightly less hawkish than their ECB counterparts in the latest commentaries and hence allowed the EUR/USD bulls to rise further. Furthermore, Monday’s downbeat US Dallas Fed Manufacturing Business Index for March contrasted with Germany’s strong IFO data for the said month to offer additional strength to the EUR/USD bulls.

Meanwhile, the geopolitical fears surrounding China and Russia challenge the market’s upbeat sentiment, as well as the EUR/USD bulls. That said, talks about China’s failure to keep the pace of growth promised, as well as Russia’s alleged readiness to use nuclear weapons against Ukraine. On the same line are the latest comments from North Korean Leader Kim Jong Un who recently stated, per KCNA news, “(They) should be fully ready to use nuclear weapons at any time.” Recently, Russia was said to have test-fired antiship missile in the Sea of Japan.

Against this backdrop, S&P 500 Futures print mild gains around 4,010 during the four-day uptrend whereas the US Treasury bond yields remain sidelined after snapping a three-day downtrend on Monday. It’s worth noting that the US 10-year and two-year Treasury yields grind higher around 3.53% and 3.93% by the press time. That said, the US Dollar Index (DXY) drops for the second consecutive day to 102.65, down 0.21% intraday by the press time.

Looking forward, the US Conference Board’s (CB) Consumer Confidence for March, as well as the second-tier housing and activity data, can direct intraday moves of the EUR/USD pair. However, major attention will be given to ECB President Christine Lagarde’s speech and inflation clues for clear directions, which in turn highlights today’s statements from ECB’s Lagarde and  Harmonized Index of Consumer Prices (HICP) details for Germany and Europe, up for publishing on Thursday and Friday. Also important is the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index.

Also read: US Consumer Confidence Preview: No good news for Americans

Technical analysis

EUR/USD bulls justify the previous bounce off the 50-DMA, around 1.0735 by the press time, while aiming a two-month-old horizontal resistance around 1.0930.