EUR/USD steadies around 1.2070 following sharp decline
- EUR/USD remains on track to close the day deep in the negative territory.
- Annual CPI inflation in US jumped to 4.2% in April.
- US Dollar Index gains more than 0.5% on Wednesday.
The EUR/USD pair spent the first half of the day moving sideways in a relatively tight range above 1.2100 on Wednesday but came under strong pressure during the American trading hours. As of writing, the pair, which touched a daily low of 1.2066, was down 0.58% on a daily basis at 1.2075.
USD gathers strength on the back of rising T-bond yields
The highly-anticipated inflation data from the US showed on Wednesday that the Consumer Price Index (CPI) in April jumped to 4.2% on a yearly basis from 2.6% in March. This reading surpassed the market expectation of 3.6%. Moreover, the Core CPI, which excludes volatile food and energy prices, climbed to 3% from 1.6%, compared to analysts' estimate of 2.3%.
The US Treasury bond yields surged higher after this report and provided a boost to the greenback. With the benchmark 10-year US T-bond yield rising more than 3% on the day, the US Dollar Index is up 0.62% at 90.73.
There won't be any macroeconomic data releases featured in the European economic docket on Thursday and the USD's market valuation is likely to continue to drive EUR/USD's action. In the second half of the day, the Producer Price Index (PPI) data from the US will be looked upon for fresh impetus. A similarly strong PPI reading is likely to help the USD continue to outperform its rivals. The US Department of Labor will release its weekly Initial Jobless Claims data as well.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
