|

EUR/USD remains on the defensive below 1.0700, Fed Chair Powell's speech in focus

  • EUR/USD struggles to gain any meaningful traction on Wednesday despite subdued USD price action.
  • The risk-on mood and declining US bond yields cap the recent USD recovery from a multi-week trough.
  • Expectations that the ECB is done raising rates seem to undermine the Euro and keep a lid on the pair. 

The EUR/USD pair lacks any firm intraday direction on Wednesday and oscillates in a narrow trading band, around the 1.0700 round-figure mark during the Asian session.

The recent sharp pullback in the US Treasury bond yields, along with an extended rally in the US equity markets, fails to assist the safe-haven US Dollar (USD) to capitalize on this week's goodish recovery from its lowest level since September 20. This, in turn, is seen as a key factor acting as a tailwind for the EUR/USD pair. The downside for the USD, however, seems cushioned in the wake of the uncertainty over the Federal Reserve's (Fed) future rate hike path.

The US central bank last week noted that financial conditions may be tight enough already to control inflation. The markets took this as a sign that the Fed was done with its policy-tightening campaign. Adding to this, the softer US monthly jobs report released on Friday reaffirmed the view that the Fed will maintain the status quo for the third straight time in December. That said, several Fed officials took a hawkish stance and acknowledged the US economic resilience,

This, in turn, keeps hopes alive for a further interest rate increase by the Fed and should lend some support to the Greenback. Traders might also refrain from placing aggressive directional bets ahead of Fed Chair Jerome Powell's speech later during the early North American session. In the meantime, Tuesday data showing a larger-than-expected fall in German Industrial Production in September might continue to undermine the Euro and contribute to capping the EUR/USD pair.

This, along with expectations that additional rate hikes by the European Central Bank (ECB) may be off the table, suggests that the path of least resistance for spot prices is to the downside. Market participants now look to the release of the final German CPI print and the Eurozone Retail Sales for some impetus ahead of Powell's speech. Furthermore, the US bond yields and the broader risk sentiment will influence the USD, which should produce short-term opportunities around the EUR/USD pair.

Technical levels to watch

EUR/USD

Overview
Today last price1.0692
Today Daily Change-0.0003
Today Daily Change %-0.03
Today daily open1.0695
 
Trends
Daily SMA201.06
Daily SMA501.0632
Daily SMA1001.0803
Daily SMA2001.0806
 
Levels
Previous Daily High1.0724
Previous Daily Low1.0664
Previous Weekly High1.0747
Previous Weekly Low1.0517
Previous Monthly High1.0695
Previous Monthly Low1.0448
Daily Fibonacci 38.2%1.0687
Daily Fibonacci 61.8%1.0701
Daily Pivot Point S11.0665
Daily Pivot Point S21.0635
Daily Pivot Point S31.0606
Daily Pivot Point R11.0724
Daily Pivot Point R21.0753
Daily Pivot Point R31.0783

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis
 

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows. 

Gold moves closer to $5,150 amid sustained safe-haven flows

Gold climbs back above $5,100 during the Asian session on Wednesday, moving away from an over one-week low, touched the previous day. Sustained safe-haven flow, amid escalating geopolitical tensions in the Middle East, acts as a tailwind for the bullion. However, a bullish US Dollar and reduced bets for more aggressive easing by the US Fed might keep a lid on the non-yielding yellow metal ahead of the US ADP report and ISM Services PMI later today.

Ethereum: Whales step up buying as short positions contract

After holding firm heading into the last weekend, Ethereum whales have returned to action, pouncing on the volatility stemming from escalating military actions between the US and Iran.

Energy shock 2.0: Why rising Gas prices could hit the Euro

Even without a confirmed, sustained disruption, the mere risk to a key global energy chokepoint is enough to inject a significant premium into European Gas markets. And for the Euro, that matters.

Ripple falters amid sell-off jitters and negative funding rates

Ripple (XRP) has come under pressure, drifting lower to $1.35 at the time of writing on Tuesday. The over 2% correction looks poised to erase the previous day’s gains, which lifted the remittance token to $1.42.