|

EUR/USD remains under pressure, treads waters around 1.0720

  • EUR/USD weakened due to the Eurozone's downbeat economic data.
  • Eurozone soft statistics increase the odds of the ECB shifting away from its hawkish stance.
  • 10-year US bond yield rose by 1.85%; contributing to the strength of the US Dollar (USD).

EUR/USD hovers around 1.0720 during the Asian session on Wednesday, treading waters to snap the previous day’s losses. The pair is under pressure due to disappointing data from the Eurozone released on Tuesday.

Eurozone Producer Price Index (PPI) for July reduced to -0.5% on a monthly basis and -7.6% on an annual basis from -0.4% and -3.4% respective priors. Further, HCOB Composite PMI for August declined to 46.7 from the previous reading of 47, which was expected to remain unchanged.

The discouraging statistics have increased the likelihood of the European Central Bank (ECB) shifting away from its hawkish stance due to concerns about a potential recession. This is exerting downward pressure on the EUR/USD currency pair.

ECB President Christine Lagarde advocated that central banks maintain a strong anchor on inflation expectations. In a similar vein, Joachim Nagel, President of the Deutsche Bundesbank and a member of the ECB Council, also offered support for price stability but refrained from offering additional specifics at that time.

Furthermore, The Currency, an Irish business publication, published on Tuesday, an interview with ECB Chief Economist Phillip Lane on August 31. In the interview, Lane commended the softening of the August inflation data. Nevertheless, he emphasized the importance of maintaining such favorable statistics to resist the pressure from the more hawkish members of the ECB.

US Dollar Index (DXY), which compares the Greenback against six other major currencies, trades higher around 104.80 at the time of writing. the upbeat yields on US Treasury bonds help the buck to maintain its strength. The 10-year US Treasury yield rose to 4.26%, up by 1.85%.

However, United States (US) Factory Orders for July plummeted to their lowest levels since mid-2020, with a month-on-month decline of -2.1%, far below the anticipated -0.1%, and swinging from the 2.3% growth seen previously.

Fed Governor Christopher Waller told to CNBC that the decision to raise rates or halt rate increases would be contingent on the data. Waller also stated that data is indicating a favorable outlook for a soft-landing scenario, a sentiment that bolstered the strength of the US Dollar.

Market participants will likely watch the upcoming data scheduled to be released later in the day. These datasets include German Factory Orders and Eurozone Retail Sales for July. On the US docket, the US ISM Services PMI for August and US S&P Global PMIs are due. These releases will offer insights to strategize the bets on the EUR/USD pair.

EUR/USD: additional important levels

Overview
Today last price1.0721
Today Daily Change-0.0001
Today Daily Change %-0.01
Today daily open1.0722
 
Trends
Daily SMA201.0865
Daily SMA501.0961
Daily SMA1001.0918
Daily SMA2001.082
 
Levels
Previous Daily High1.0798
Previous Daily Low1.0706
Previous Weekly High1.0946
Previous Weekly Low1.0772
Previous Monthly High1.1065
Previous Monthly Low1.0766
Daily Fibonacci 38.2%1.0742
Daily Fibonacci 61.8%1.0763
Daily Pivot Point S11.0686
Daily Pivot Point S21.065
Daily Pivot Point S31.0594
Daily Pivot Point R11.0778
Daily Pivot Point R21.0834
Daily Pivot Point R31.087

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

More from Akhtar Faruqui
Share:

Editor's Picks

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.


USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.


Gold: Sell-off meets support near $4,250… for now

Gold accelerates its downward trend on Monday, coming close to the $4,250 mark per troy ounce, or multi-week lows, on the back of the intense rebound in the US Dollar and US Treasury yields across the curve. The precious metal’s retracement comes on the back of steady speculation of an interest rate increase by the Fed and reignited inflation worries in response to the rally of crude oil prices.

Crypto Today: Bitcoin, Ethereum, XRP recover ahead of US Senate vote on CLARITY Act

Bitcoin edges higher, trading near $77,884 as of Monday, in tandem with broader gains across the cryptocurrency market. Ethereum and Ripple follow Bitcoin’s neutral-to-bullish trajectory, holding key support levels at $2,521 and $1.38, respectively.

Will the Fed deliver the hawkishness markets are pricing in?

Fed hike bets increase after PPI and CPI reports. Updated dot plot to be crucial for the dollar’s reaction. Warsh’s independence faces test amid Trump’s pressure for lower rates. For the Dollar to extend gains, Fed needs to satisfy current hawkish bets.


Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.