- EUR/USD struggles for clear direction despite bouncing off intraday low.
- Traders seek more clues to confirm US CPI-led support to Fed’s “transitory” inflation outlook.
- Covid woes prevail, Biden rejects Republicans’ threat to debt ceiling talks.
- EU Industrial Production, US PPI and Jobless Claims may offer fresh pulse.
EUR/USD regains 1.1740, off intraday low but unchanged on a day, heading into Thursday’s European session. The currency major pair struggles for clear direction as a light calendar in Asia and dead news feed probes the corrective pullback from the yearly bottom marked the previous day.
The US Dollar Index (DXY) remains pressured, down 0.03% around 92.88 by the press time, after taking a U-turn from the highest levels since April on Wednesday. While the greenback’s prior weakness could be linked to the US Consumer Price Index (CPI) data for July, as well as comments from the Fed policymakers, the latest pullback portrays the traders’ indecision amid mixed clues.
Even so, chatters that the US diplomats, including Treasury Secretary Janet Yellen, are up for meeting their Chinese counterparts, seem to favor the mild risk-on mood and weigh on the DXY. On the same line could be the news that the US Food & Drug Administration (FDA) braces for the third vaccine dose for immunocompromised people, per the NBC news.
Meanwhile, contrasting clues from the US and European policymakers over the challenges to economic recovery due to the Delta covid variant and future moves of the Fed and the ECB keeps the EUR/USD pair troubled after the latest inflation figures from the US and Germany.
Against this backdrop, S&P 500 Futures remain sluggish around the record top whereas the US 10-year Treasury yields regain 1.35% level, reversing the previous day’s fall.
Given the US dollar’s lack of reaction to the firmer Treasury yields and mildly upbeat fundamentals, EUR/USD traders will keep their eyes on the Eurozone Industrial Production for June, expected -0.2% versus -1.0% prior, ahead of the US Producer Price Index (PPI) data for July, market consensus backs no change in 5.6% YoY figures. Also important will be the weekly readings of the US Jobless Claims, likely to ease from 385K to 375K, after the strong NFP.
Above all, covid headlines and chatters concerning the US budget, as well as the stimulus package, will be important to follow for fresh direction.
It’s worth noting that the EUR/USD bears are likely tiring around the key support and hence any USD-negative catalysts will be welcomed with zeal.
Technical analysis
Although a five-week-old support line joins the yearly bottom to highlight the 1.1700 as the key support, a three-week-long resistance area near 1.1750-55 becomes the immediate hurdle ahead of a bit longer horizontal region, from July 13, around 1.1770, to challenge recovery.
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 could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.