- EUR/USD remains sidelined after an upbeat start to the likely quiet week.
- Softer US data, hawkish ECB outshine Fed talks amid light calendar, year-end sluggish sentiment.
- Firmer yields, recession woes challenge pair buyers, sellers await US PCE Price Index.
EUR/USD seesaws near 1.0600 as it snaps two-day downtrend amid early Monday in Europe.
The major currency pair’s latest inaction could be linked to the cautious sentiment ahead of this week’s US data, as well as mixed concerns surrounding European growth. However, hawkish comments from the European Central Bank (ECB) policymakers and the central bank’s readiness for higher rates keep buyers hopeful.
During the last week, European PMIs have been better than the first readings of the US activity data and bolstered the bullish bias of the ECB policymakers. Additionally, chatters that the bloc’s policymakers may ease control on the oil price cap to get the resolution passed also keep the EUR/USD prices firmer, via hopes of higher oil prices and a stronger need to tame the higher inflation.
It’s worth noting, however, that the higher rates and inflation fears favor the recession woes and underpin the Treasury bond yields, which in turn tease the US Dollar bulls amid a sluggish session. Also likely to have teased the greenback buyers could be the recently hawkish comments from the Fed policymakers, including Federal Reserve Bank of Cleveland President Loretta Mester and New York Federal Reserve President John Williams.
Above all, the year-end consolidation and holiday mood join the light calendar to restrict immediate EUR/USD moves. Even so, the final readings of the US Q3 GDP and the Fed’s preferred version of inflation, namely Friday’s US Core Personal Consumption Expenditures (PCE) - Price Index, expected 4.6% YoY and 5.0% previous readings, will be important to watch for fresh impulse.
Technical analysis
A daily closing beyond the previous support line from November 30, around 1.0640, becomes necessary to convince EUR/USD bulls. Otherwise, a convergence of the 21-DMA and the mid-November peak could challenge the pair sellers near 1.0480.
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
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.