- EUR/USD keeps bounce off 16-month low, grinds higher of late.
- Inflation expectations, US housing numbers weigh on US Treasury yields amid sluggish session.
- ECB policymakers praise economic activities, tame reflation fears.
- Speeches from Fed, ECB members will join US data to entertain intraday traders.
EUR/USD licks its wounds around 1.1335, up 0.08% intraday during early Thursday. The major currency pair dropped to the fresh low since July 2020 on the previous day before bouncing off 1.1263 to close the session with mild gains. That said, a pullback in the US Treasury yields weigh on the US dollar and challenge the buyers amid a sluggish session with a light calendar.
The US Dollar Index (DXY) marks a second consecutive daily loss, down 0.09% intraday around 95.70, while tracking the two basis points (bps) of a downside by the US 10-year Treasury yields. It’s worth noting that the DXY jumped to a fresh 16-month high and the US bond yields refreshed three-week tops the previous day but closed in negative territory for the first time in the week.
While checking the moves, soft US Housing Start and a two-day decline of the US inflation expectations can be linked as the key catalysts. US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, drop for the second consecutive day on Wednesday, per the data source Reuters.
Additionally, ECB policymakers’ rejection to reflation fears and hopes of moderate economic growth going forward also favored the EUR/USD buyers the previous day. On the contrary, Charles L. Evans, the Chief Executive Officer of the Federal Reserve Bank of Chicago said, “It will take until the middle of next year to complete the Fed's wind-down of its bond-buying program, even as the central bank remains 'mindful' of inflation.”
Recently favoring the EUR/USD prices could be cautious optimism in the market as the US lauds supply chain improvements and China’s Evergrande proposes to sell 1.662 billion shares in Hengten Networks at HK$1.28.
Moving on, US Jobless Claims, expected to ease from 267K to 260K, will join the Philadelphia Fed Manufacturing Survey for November, likely 24 versus 23.8 prior, to entertain the EUR/USD pair traders. However, major attention will be given to the ECB and Fed policymakers’ comments as the divergence between the two central bank’s next moves amplify of late.
Technical analysis
Corrective pullback remains elusive until crossing the previous support line from August near 1.1400. Alternatively, the recent multi-month low of 1.1260 will precede late 2019 peaks surrounding 1.1240 to challenge EUR/USD bears.
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 stays weak near 1.0650 ahead of Eurozone PMI data
EUR/USD remains on the back foot near 1.0650 in European trading on Tuesday. Resurgent US Dollar demand amid a cautious risk tone weighs on the pair. Investors stay wary ahead of the preliminary Eurozone and US business PMI data.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold could see a rebound before resuming the correction
Gold price sees a fresh leg down in Asia on Tuesday even as risk flows dissipate. Receding fears over Middle East escalation offset subdued US Dollar and Treasury bond yields. Gold remains heavily oversold on the 4H chart, rebound appears in the offing.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.