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EUR/USD retraces the intraday losses near 1.0590, awaits Eurozone HICP, US Core PCE

  • EUR/USD reverses toward 1.0600, recovering from intraday losses.
  • ECB President Christine Lagarde has emphasized that interest rates will remain restrictive for as long as necessary.
  • Investors adopt caution ahead of upcoming economic data releases, seeking inflationary pressures in both economies.
  • 10-year US bond yield has risen to 4.56%, boosting the US Dollar (USD).

EUR/USD recovers its intraday losses, trading around 1.0590 during the Asian trading session on Tuesday. This pair faced challenges despite comments from European Central Bank (ECB) President Christine Lagarde stating that interest rates will remain restrictive for an extended period.

However, Lagarde also noted that inflation is expected to stay "too high for too long." However, the ECB is facing a difficult situation as it seeks to balance the need to address rising inflation while not adversely affecting the Eurozone's uneven domestic economy. This delicate balancing act is likely contributing to the downward pressure on the euro against the US dollar (USD).

The US Dollar Index (DXY) holds ground near 106.00, although it's close to its recent high since November. The US Dollar (USD) continues to display strength, driven in part by a combination of cautious market sentiment and rising US Treasury yields.

The yield on the 10-year US Treasury note has climbed to 4.55%, a level not seen since October 2007.

The expectation of higher interest rates being sustained for an extended period is based on the resilience of the US economy. Moreover, the US Federal Reserve (Fed) signaled further interest rate hikes, if necessary, reinforcing the strengthening of the buck.

Recent warnings from US President Joe Biden and a senior adviser about the potential consequences of a federal government shutdown have also added to market concerns. They highlighted the possible widespread difficulties that could arise from a shutdown, including the loss of food benefits for nearly 7 million low-income women and children.

While there was a prior agreement between President Biden and House Speaker Kevin McCarthy on government spending levels, the Republican-controlled House of Representatives may attempt to pass significant budget cuts this week.

These proposed cuts would require approval by the Democratic-controlled Senate, which is expected to reject them. Failure to reach an agreement between both houses could result in a partial government shutdown by the following Sunday.

Investors will likely monitor the release of key economic data, including the US Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, and the Eurozone's Core Harmonized Index of Consumer Prices (HICP), scheduled for Friday.

These datasets are expected to provide crucial insights into inflationary pressures in both economies and may influence trading decisions in the EUR/USD pair.

EUR/USD: additional important levels

Overview
Today last price1.0593
Today Daily Change0.0000
Today Daily Change %0.00
Today daily open1.0593
 
Trends
Daily SMA201.0727
Daily SMA501.0872
Daily SMA1001.0873
Daily SMA2001.083
 
Levels
Previous Daily High1.0656
Previous Daily Low1.0575
Previous Weekly High1.0737
Previous Weekly Low1.0615
Previous Monthly High1.1065
Previous Monthly Low1.0766
Daily Fibonacci 38.2%1.0606
Daily Fibonacci 61.8%1.0625
Daily Pivot Point S11.056
Daily Pivot Point S21.0527
Daily Pivot Point S31.0479
Daily Pivot Point R11.0641
Daily Pivot Point R21.0689
Daily Pivot Point R31.0722

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.

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