EUR/USD Plunges on Recession and Inflation Fears

EUR/USD today reportedly plunged near 1.0730 as it braces for a second straight weekly decline ahead of key US data on Friday morning. We summarize information about this news based on fxstreet.com page. The pair both refreshed their weekly highs on the previous day before briefly reversing from 1.0790 on fears of a recession. Nonetheless, the quotes have updated intraday lows at the time of news writing. The widest negative difference between 10-year and 2-year U.S. Treasury bond yields since 1980 reinforced the recession woes of the previous day. 

The yield curve reversal is still around the same level as the yields of these two major bonds are still active, close to 3.67% and 4.49%, respectively, at the time of this news. While recession woes renewed demand for USD, lower German inflation data also probed EUR/USD buyers. On Thursday, Germany's headline inflation preliminary reading, the Harmonized Consumer Price Index (HICP) fell 9.2% YoY for January compared with expected data of 10% and 9.6% earlier. In addition, the absence of hawkish arguments by ECB policymakers, despite their rejection of interest rate cuts, also seems to weigh on the pair. It is worth noting that the dismal data from the US weekly initial jobless claims rose to 196K against 190K, higher than the previously expected data of 183K. 

The Fed's Barkin seems too dovish when suggesting a rate cut as he said that it would make sense for the Fed to steer deliberately from here because of the lingering policy effects. Previously, Fed Chairman Jerome Powell was hesitant to support an optimistic US jobs report and raised concerns that there would be no more hawkish moves from the US central bank. On the same lines could be China-related optimism as US President Biden's taming of fears stemming from the shooting of Chinese balloons joined expectations of a rate cut by the People's Bank of China (PBOC) and the resumption of the listing of China-based companies in the US. exchange.

While describing the mood, S&P 500 Futures struggled for a clear direction even as Wall Street closed with losses while stocks in the Asia-Pacific region have fallen lower lately. Looking ahead, the light calendar in the bloc requires traders of the EUR/USD currency pair to observe risks for the medium ahead of the initial signal of US inflation data next week regarding the preliminary reading of the 5-year Michigan Consumer Sentiment Index. Consumer Inflation Expectations for the February period. Considering the upbeat expectations of the scheduled data and fears of a recession, the major currency pair is likely to see further declines. 

That's the explanation of "EUR/USD Today, February 10, 2023". Also read our other articles, such as an explanation of how to buy cryptocurrencies, only in the GIC Journal. Keep updating other news through the GIC Journal every day to find out more information. Trade on GIC using an ECN account to enjoy Forex trading with low spreads starting from zero!