- EUR/USD consolidates weekly losses around early April lows.
- US dollar pares gains as Treasury yields snap three-day uptrend.
- Market sentiment stays heavy amid expectations favoring Powell’s defensive play.
- US PPI, EU Industrial Production and ECB’s Schnabel can also direct traders.
EUR/USD edges higher around 1.1780-85, up 0.06% intraday, heading into Wednesday’s European session. In doing so, the major currency pair rises for the first time in three days amid the US dollar pullback from a monthly high. However, the corrective pullback fades of late on cautious sentiment ahead of US Federal Reserve (Fed) Chair Jerome Powell’s testimony.
The currency-major pair dropped the most since mid-June after strong US CPI empowered the bears the previous day. Also backing the moves were the coronavirus (COVID-19) variant fears putting a safe-haven bid under the US dollar.
US Consumer Price Index (CPI) data for June jumped past 4.9% expected to 5.4% YoY while the core reading was also upwardly revised from 3.8% to 4.5%. It’s worth noting that the covid variant resurgence poses a downside risk to the Western economic transition from the pandemic, which in turn highlights the greenback’s safe-haven appeal.
On a positive side, US Senate Democrats agreed on a $3.5 trillion investment plan they aim to include in a budget resolution to be debated soon, Senate Majority Leader Chuck Schumer said, per Reuters. Though the uncertainty surrounding the US stimulus remains on the table, adding to the risk-safety moves.
It should, however, be noted that the soft bid on the 30-year bond auction seems to have recently probed the US Treasury yields. That said, the US 10-year Treasury yields step back from the weekly top, down 1.5 basis points (bps) to 1.40%, amid a sluggish Asian session. The dull sentiment could also be noted via the -0.08% intraday downside of the S&P 500 Futures.
Looking forward, Powell’s defense to the strong inflation data will be watched closely as any loose links may not hesitate to recall the USD bulls. Also important will be US Producer Price Index (PPI) data for June, expected 6.8% YoY versus 6.6% prior, as well as a speech from ECB policymaker Isabel Schnabel.
Read: Powell Preview: Three reasons to expect the Fed Chair to down the dollar
Technical analysis
Oversold RSI conditions and an ascending support line from November challenge EUR/USD bears around 1.1760. Also backing the hopes of a corrective bounce is the latest uptick in Momentum. Meanwhile, the recent bounce eyes the 1.1800 threshold but any further recoveries will be tested by a 13-day-old resistance line around 1.1865.
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 stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.