EUR/USD steadies near 1.0550 as ECB, Fed policymakers repeat hawkish guidance

EUR/USD struggles to extend the previous day’s recovery moves from a two-month low, making rounds to 1.0550 during early Thursday. In doing so, the major currency pair traces the sluggish markets amid a light calendar and an absence of major surprises from the central bankers. It’s worth noting that the mixed data from the US and Eurozone join the cautious mood ahead of Friday’s key jobs report to also restrict the Euro currency pair’s latest moves.

Recently, US President Joe Biden’s proposal to inflate the corporation tax seems to weigh on the mood and tease EUR/USD sellers. Even so, the S&P 500 Futures remain 0.05% down on a day and fail to mark any notable moves on a broader front.

On Wednesday, German Retail Sales dropped to -6.9% YoY for January from -6.4% prior and -6.1% analysts’ estimations while Industrial Production growth jumped to 3.5% versus 1.4% expected and -2.4% previous readings (revised).

Further, the Eurozone Employment Change eased to 0.3% QoQ during the fourth quarter (Q4) versus 0.4% market forecasts and prior whereas the seasonally adjusted Gross Domestic Product (GDP) eased to 1.8% YoY during the said pair versus 1.9% expected and previous readings.

Considering the data, ECB Governing Council member Ignazio Visco said in a statement on Wednesday, “monetary policy will have to remain prudent.” The policymaker also added, “Monetary policy should be guided by data as it becomes available.”

On the other hand, the US ADP Employment Change rose to 242K in February versus 200K market forecasts and 119K prior (revised). Further, the US Goods and Services Trade Balance dropped to $-68.3B from the $-67.2B previous reading (revised) and $-68.9B analysts’ estimations. It should be noted that the US JOLTS Job Openings for January improved to 10.824M versus 10.6M expected but eased from 11.234M revised prior.

It should be noted that the benchmark US Treasury bond yields rose in the last three consecutive days and raised recession fears via the widest difference between the two-year and 10-year bond coupons.

That said, Federal Reserve Chairman Jerome Powell repeated his hawkish remarks in front of the House Financial Service Committee. The policymaker highlighted the data dependency of the Fed while also signaling that they have underestimated the resilience of growth and inflation. 

Looking ahead, the second-tier US job numbers may entertain EUR/USD traders ahead of Friday’s United States employment report.

Technical analysis

Although Wednesday’s Doji Candlestick challenges the EUR/USD bears around a two-month low, recovery remain elusive unless the quote offers a successful trading beyond an upward-sloping trend line from early December 2022, around 1.0555 by the press time.