- EUR/USD is expected to display a downside below 1.0660 as the street fears a surprise rise in US inflation.
- Fed policymakers see interest rates higher for extended periods as inflation is still elevated.
- ECB policymakers have been reiterating that Eurozone won’t face a deep recession; if it happens, it will be shallow.
The EUR/USD pair showed a pullback move to near 1.0680 in the early Tokyo session. The pullback move by the major currency pair seems to lack strength and is facing barricades in extending its gains. The shared currency asset is likely to display more weakness after surrendering the immediate support of 1.0660 as the risk-aversion theme is gaining more strength.
S&P500 recovered late Friday but ended the week on a bearish note amid fresh concerns of a further slowdown in economic activities ahead of the release of the United States Consumer Price Index (CPI), portraying a dismal market mood. Tuesday’s US inflation data will set the undertone for March’s monetary policy meeting by the Federal Reserve (Fed).
The US Dollar Index (DXY) refreshed its two-day high at 103.35 and is expected to deliver further upside amid the risk of a rebound in the declining US inflation trend. The demand for US government bonds remained extremely weak as the street is expecting a surprise upside in the US inflation after a bumper US Nonfarm Payrolls (NFP) report. This supported the 10-year US Treasury Yields to record a fresh monthly high at 3.74%.
A Reuters poll indicates that the monthly headline CPI and core inflation that excludes oil and food prices will escalate by 0.4%. This might force Fed chair Jerome Powell and his mates to look for more interest rate hikes ahead as the battle against inflation could get complex. Last week, Fed policymakers favored the context of higher interest rates for a more extended period as the inflationary pressures are still elevated as the healthy labor market could propel consumer spending.
On the Eurozone front, investors are awaiting the release of the Gross Domestic Product (GDP) (Q4) data, which will release on Tuesday. As per the consensus, the economic data for the quarter and on an annual basis is similar to its former releases at 0.1% and 1.9%, respectively. This indicates that the Eurozone economy has yet to see a recession in CY2022. Also, European Central Bank (ECB) policymakers have been reiterating that Eurozone won’t face a deep recession; if it happens, it would be shallow as the signs of recovery are extremely solid.
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: Bulls continue to target 0.6300
AUD/USD traded in a tight range and faltered once again just ahead of the key 0.6300 hurdle on the back of the renewed buying interest in the US Dollar and the widespread knee-jerk in the risk complex.
EUR/USD: Further gains look at 1.0600 and above
The weekly recovery in EUR/USD gave signs of some loss of momentum despite the pair hit new three-week highs around 1.0460 in a context dominated by the resurgence of the bid bias around the Greenback.
Gold remains on track to challenge record peaks
Gold price sticks to positive bias for the third successive day on Wednesday and trades near its highest level since November 1 above $2,750. The uncertainty around US President Donald Trump's trade policies turns out to be a key factor that continues to drive haven flows towards the precious metal.
Dogecoin Price Prediction: Bulls target $0.40 rally as Trump officially launches Elon Musk’s DOGE
Dogecoin price rose 5% on Wednesday to reclaim $0.38 as Donald Trump signed the DOGE department into law. Media reports linking the Dogecoin logo to the official DOGE website sparked bullish speculations that a $0.50 breakout could be imminent.
Netflix posts record quarter, as Trump talks tariffs on China
There has been a positive tone to risk this week, as the market digests Trump 2.0. However, Trump is not the only show in town. Earnings reports are also a key driver of stock indices, and the news is good.
Trusted Broker Reviews for Smarter Trading
VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.