- EUR/USD consolidates recent losses around one-month low, probes three-day downtrend.
- ECB hawks forget last week’s failed attempt to please bulls; upbeat EU data also favors Euro buyers.
- Receding concerns about US recession, hawkish Fedspeak exerts downside pressure on the pair.
- Fed Chair Powell, ECB’s Schnabel could entertain traders; Sino-American news is important too.
EUR/USD licks its wounds around 1.0735 while probing bears at the monthly low, after a three-day dominance, during early Tuesday. In doing so, the major currency pair portrays the market’s indecision ahead of the key events, namely speeches from the European Central Bank (ECB) and Federal Reserve (Fed) officials.
The Euro failed to cheer hawkish ECB speak and firmer Eurozone data on Monday as it dropped to the lowest levels since January 09 amid a broad US Dollar recovery.
“The risk of doing too little dwarfs the risk of overtightening policy,” European Central Bank (ECB) policymaker Robert Holzmann said on Monday.
Talking about the data, the Eurozone Sentix Investor Confidence index improved further to -8.0 in February from -17.5 in January vs. -12.8 expected. On the same line, Eurozone Retail Sales arrived at -2.8% YoY in January vs. -2.7% expected and -2.5% prior. Furthermore, German Factory Orders growth jumped to 3.2% MoM following an upwardly revised 4.4% fall in December and 2.2% market forecasts.
On the other hand, the US economic calendar was mostly silent but growth optimism by US Treasury Secretary Janet Yellen and President Joe Biden joined hawkish Fed talks to propel the US Treasury bond yields, as well as the US Dollar. “The strong labor market probably means ‘we have to do a little more work,’” said Federal Reserve Bank of Atlanta President Raphel Bostic in an interview with Bloomberg.
That said, a dash on the US diplomatic visit to Beijing and China’s harsh reaction to the US shooting down its balloon by terming it a spying attempt triggered the market’s risk-off mood and weighed on the EUR/USD pair the previous day. However, the latest comments from US President Joe Bide appear soothing on the matter as he said, “The balloon incident does not weaken US-China relations.”
Against this backdrop, S&P 500 Futures print mild gains, but the US 10-year Treasury bond struggled for clear directions around 3.63%, after a two-day rebound from the monthly low.
Looking forward, sluggish markets and pre-event anxiety may restrict immediate EUR/USD moves ahead of German Industrial Production for December, a speech from ECB policymaker Isabel Schnabel and Fed Chair Jerome Powell, not to forget US President Joe Biden’s State of the Union (SOTU) comments.
Although the ECB hawks may try to keep the EUR/USD afloat, significant attention will be given to the US policymakers’ statements for clear directions amid hawkish Fed bets.
Technical analysis
A sustained downside break of an ascending trend line from early November, around 1.0850 by the press time, keeps EUR/USD sellers hopeful amid bearish MACD signals and the downbeat RSI (14), not oversold. That said, the pair’s downside towards the 50-DMA, around 1.0690, appears imminent unless the quote stays below 1.0850.
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 steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.