- EUR/USD prints three-day uptrend, on the bids to refresh multi-day top of late.
- US dollar tracks treasury yields to print mild losses amid a sluggish session.
- Central bankers’ comments, covid updates and geopolitics back the up-moves.
- Eurozone CPI may challenge the policymakers’ rejection of reflation fears.
EUR/USD takes the bids to refresh the highest levels since August 06, up 0.15% intraday around 1.1815, heading into Tuesday’s European session. In doing so, the currency major pair cheers the broad US dollar weakness ahead of the preliminary reading of the Eurozone Consumer Price Index (CPI).
The US Dollar Index (DXY) drops to a fresh low in two weeks, down 0.11% around 92.59 at the latest, as market sentiment improves amid a bit of consolidation in the virus figures. Also weighing on the greenback gauge, and favoring the EUR/USD bulls, are the downbeat Treasury yields. That said, That said, the US 10-year Treasury yields drop for the third consecutive day to refresh weekly low around 1.273%, down 1.1 basis points (bps) by the press time.
Not only a step back in Australia’s daily infections from record top but six-day low coronavirus numbers from New Zealand and the lowest COVID-19 cases in two weeks in the UK offer a mild optimism to the traders, underpinning the USD selling. However, the market’s anxiety ahead of today’s Eurozone CPI and Friday’s US Nonfarm Payrolls (NFP) seems to challenge the pair buyers. It’s worth noting that geopolitical fears from Afghanistan and China also probe the EUR/USD upside.
Also, comments from the European Central Bank (ECB) policymakers, suggesting an extension of easy money policies, offer an extra boost to the EUR/USD upside. Recently, Governing Council member Robert Holzmann, as well as Governing Council member and Bank of France Head Francois Villeroy de Galhau rejected the reflation fears. Hence, today’s inflation data from the bloc, expected to double from 0.7% YoY previous readouts to 1.5% YoY, will be the key to watch.
While an easy Eurozone CPI print should provide an additional reason to the EUR/USD bulls, second-tier US Chicago PMI, Consumer Confidence and housing figures may direct follow-on moves. Though, nothing will be more important than the US jobs report for August, which will justify Fed Chair Jerome Powell’s cautious optimism and determine the future of Fed’s tapering.
Technical analysis
EUR/USD bulls attack 50-DMA hurdle around 1.1810 amid upbeat MACD signals. Should the quote crosses 1.1810 on a daily closing basis, it will be the first since mid–June, which in turn should recall the buyers targeting the monthly high near 1.1900. Meanwhile, pullback moves will be challenged by 200-SMA on the four-hour chart and the seven-day-old support line, respectively around 1.1780 and 1.1755.
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