- EUR/USD rises as stock market gains keep the dollar under pressure.
- Yellen calls for big fiscal spending, powers risk assets higher.
- The spread between the US-Eurozone inflation expectations favors a drop in EUR/USD.
Dollar sellers power EUR/USD higher to key technical hurdle as stocks markets across Asia cheer prospects of massive fiscal spending in the US.
Yellen favors big spending
The US Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package on Tuesday, stating that the benefits of increased spending are greater than the costs associated with a higher debt burden.
Yellen's comments put a bid under the US stocks, lifting major indices higher. The risk-on has hit the Asian shores, pushing stock markets to record highs. As such, the anti-risk dollar is losing ground against the EUR and other major currencies.
A better-than-expected German Zew survey released Tuesday could be adding to bullish pressures around EUR/USD apart from Yellen's comments.
EUR/USD is currently trading 0.14% higher on the day at 1.2145. The pair almost tested the 200-hour Simple Moving Average (SMA) at 1.2153 in Asia, having rallied by 0.45% on Tuesday.
However, readers should note that the Eurozone inflation expectations are considerably lower than in the US and could complicate EUR/USD's recovery from Monday's low of 1.2054.
The US 10-year breakeven rate, which represents how the market foresees long-term price pressures, rose to 2.10% on Tuesday to hit the highest level since Oct. 22, 2018. With inflation expectations rising well above Federal Reserve's 2% inflation target, the US Treasury yields could continue to rise in a USD-positive manner. The 10-year yield is currently seen at 1.09%, having risen from 0.90% to 1.18% earlier this month.
Technical levels
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.