Recent Moves Fade Earlier Gains
The EUR/USD currency pair was not able to pick up the pace on Tuesday as sellers toyed with 1.0750-40. It faded the recovery away from the daily low point. This was before the European session began.
The US Dollar is stronger before the publication of major reports in the Eurozone. There is also anxiety in the market as Biden and Powell are set to meet. The coming meeting between the US President and Fed Chair caused the pair to pull back.
EUR/USD price chart. Source TradingView
The US Dollar index consolidated on its first loss in five months. It posted 0.30% in daily gains close to the 101.65 mark. The index’s latest gains might equally be connected with the stronger US Treasury yields and market sentiments.
Risk appetite in the market dropped in the midst of indecisiveness on the Fed’s part. The Federal Reserve is not making definite moves due to political conditions. The US stock market is favored by declining bets on the Reserve’s next implementation.
COVID news from China is also directing funds to the US stock market. There is an extreme military situation in Donbas, Ukraine. The continuous war is indicative of possible further sanctions on Russia.
The European Union has been considering new sanctions on oil imports from Russia. The extreme economic conditions are weighing heavily on the Euro.
Still on the 50 Basis Points
Comments from Christopher Waller have also boosted the US Treasury yields and the Dollar. The member of the Board of Governors supports raising rates by 50 basis points. He said further that policy rates should go above neutral levels by year-end to cut down demands.
Meanwhile, the US ten-year bond yields rose by about 10 points. It came from the closing mark of the New York session on Friday to reach 2.84%. The S&P 500 futures posted average gains close to 4,165 in its most recent round.
With the cautious mood around, it is possible that the EUR/USD price stick to its depressed state. The strength of the US Dollar is also going to keep it in that position. Especially with the incoming inflation report for the Eurozone for May, according to the Harmonized CPI measurement.
The Eurozone’s Harmonized CPI year-on-year is speculated to renew heights with 7.7%. It will be in comparison with the last figure of 7.4%. The core inflation has the consensus expectation of 3.5% year-on-year.
If the Eurozone’s inflation report renews its high point for several years, the ECB’s hawkishness will be justified. By so doing, the pair would be propelled forward. The same will call for rethinking the pace of the Fed’s rate increase.
Bears stock to the 50-period daily moving average close to 1.0740. A break that could direct sellers in an upward way. March low points close to 1.0810 obstruct the direct increase of the EUR/USD pair.