- 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.
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
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