EUR/USD: Two-way business ahead of Draghi speech

EUR/USD swung ways on Tuesday amid Huawei reprieve and widening US-Geman yield differential.
Draghi unlikely to sound hawkish.
The EUR and other risk assets may remain under pressure on Hikvision news.

Omkar Godbole FXStreet Contributor

EUR/USD is currently sidelined around 1.1162, having hit a high and low of 1.1188 and 1.1142 in the last 24 hours.

The two-way business could be associated with the widening US-German yield differential and Huawei reprieve.

The US stocks picked up a bid and the Chinese Yuan sell-off stalled on Tuesday after the US government allowed Huawei to purchase products from the US suppliers.

The pair, therefore, rose to a high of 1.1188 in the North American session only to surrender gains on Eurozone growth concerns. Notably, the spread between the US and German two-year bond yield rose to 289 basis points on Tuesday, the highest level since May 10, strengthening the bearish pressures around the common currency.

The EUR may remain under pressure today if the yield differentials continue to widen in favor of the US dollar. Further, riskier assets will likely remain on the defensive on reports that the Trump administration is planning to blacklist China's Hikvision - a major surveillance technology firm.

The shared currency, however, would find takers if the European Central Bank (ECB) President Draghi, during his speech at 07:30 GMT, sounds hawkish. However, with the recent string of weak German and Eurozone data and uncertainty ahead of EU elections, Draghi is more likely to reiterate the need to keep the monetary policy accommodative.

Post-Draghi, the focus will shift to German 10-year bond auction. The pair may be sidelined in the US session on account of caution ahead of the Fed minutes scheduled for release at 18:00 GMT.

Pivot points

1. R3 1.1233
2. R2 1.1211
3. R1 1.1187
PP 1.1164
1. S1 1.114
2. S2 1.1117
3. S3 1.1093

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.