- EUR/USD picks up bids to reverse pullback from the weekly top.
- US dollar remains pressured around cautious optimism, monotonous Fedspeak surrounding 50 bps.
- Eurozone inflation, hawkish ECBSpeak keeps buyers hopeful of witnessing July rate hike clues in ECB Meeting Accounts.
- US housing, manufacturing and Jobless Claims to also entertain traders moving forward.
EUR/USD adds to the intraday gains by consolidating the biggest daily loss in a week around 1.0500 during early Thursday morning in Europe. The major currency pair’s latest rebound could be linked to the broad US dollar weakness amid cautious optimism in the market, as well as the Euro traders’ hopes of July rate hikes. Though, anxiety ahead of the European Central Bank (ECB) Monetary Policy Meeting Accounts seems to restrict the quote’s upside of late.
That said, the US Dollar Index (DXY) drops 0.17% intraday to 113.65 as greenback bulls await fresh clues after being tired of hearing 50 bps rate hike calls from various Fed policymakers, including Chairman Jerome Powell, of late. Philadelphia Federal Reserve Bank President Patrick Harker was the latest one in the line.
Also weighing on the US dollar is the recent recovery in the market sentiment, mainly due to improvement in China’s covid conditions and softer US data relating to housing. China reported a drop in the daily covid cases and death tolls to 1,082 and one respectively, versus 1,305 and three in that order on Thursday. On the same line are Shanghai’s plans to unlock the economy in a phased manner after covid-led restrictions.
On the other hand, record-high Eurozone inflation, per the HICP figures, join hawkish calls from the ECB policymakers like Madis Muller and Olli Rehn, as well as Governing Council member and Spanish central bank chief Pablo Hernandez de Cos, to fuel the regional currency.
Amid these plays, US 10-year Treasury yields rose 3.6 basis points to 2.92% whereas the S&P 500 Futures reverse early Asian session losses to regain the 3,920 level of late.
Moving on, ECB Meeting Accounts will be closely observed for clear hints over the time and pace of the rate hike as markets cheer the July move, which in turn could propel the EUR/USD prices in case meeting expectations.
Other than the ECB Accounts, US Weekly Jobless Claims, Philadelphia Fed Manufacturing Survey for May and Existing Home Sales for April are some other catalysts that need the attention of the EUR/USD traders. Above all, chatters surrounding inflation and growth are crucial to forecasting short-term moves of the key currency pair.
Technical analysis
A sustained bounce off the previous resistance line from March 31, around 1.0450 by the press time, directs EUR/USD buyers towards the 21-DMA hurdle surrounding 1.0560. However, the monthly high surrounding 1.0640 will challenge the quote’s further upside.
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