- EUR/USD consolidates the previous day’s losses amid quiet markets.
- Hopes of US stimulus, no challenges to Fed, ECB back the bulls.
- US Treasury yields catch a breather after two-day run-up, stock futures track Wall Street losses.
- ZEW numbers, risk catalysts can direct short-term moves ahead of Wednesday’s US CPI.
EUR/USD stays mildly bid around 1.2140 amid Tuesday’s Asian session. In doing so, the currency major pair fails to extend the previous day’s pullback from a 10-week high as market sentiment dwindles. The recent moves seem to struggle for fresh clues as traders are divided over reflation fears and dialing back to the key central banks’ easy money policies.
The European Central Bank (ECB) policymaker Isabel Schnabel recently crossed wires, via Reuters, while rejecting fears from German inflation. The ECB Executive Board Member signaled upside risk to the bloc’s key economy but also said, “the European Central Bank considers this a transient rise and will not adjust policy in response.”
Chicago Federal Reserve Bank President Charles Evans and San Francisco Federal Reserve Bank President Mary Daly were also on the same lines while rejecting the fears of recent early signals for the inflation data. It should, however, be noted that Dallas Fed President Robert Kaplan stuck to his call to discuss tapering but failed to get any support.
It’s worth mentioning that Friday’s NFP-backed risk-on mood fizzled the previous day as market players turn cautious ahead of Wednesday’s US Consumer Price Index (CPI) data. Also, contrasting moves between the increasing covid risk from Asia and upbeat vaccine updates from the West add to the trader’s confusion.
Even so, Wall Street closed in red, led by technology shares, while the US 10-year Treasury yields pause around 1.60% after rising for the last two consecutive days.
Looking forward, May’s ZEW Survey data for Eurozone and Germany will precede comments from various Fed policymakers to offer near-term direction to the EUR/USD traders. However, risk catalysts and the pre-CPI sentiment will be crucial to follow.
Technical analysis
A two-month-old rising wedge formation restricts EUR/USD moves between 1.2190 and 1.2030 respectively.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.