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Euro Money - EUR/USD is consolidating its intraday losses around 1.0980 as traders look for further clues to extend the previous day's decline amid sluggish trading on Monday in Europe.
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Hence, the Euro pair is being supported by the US Dollar’s failure to sustain a corrective bounce from a one-year low amid concerns about the US economic recovery being hampered by the government debt ceiling extension debate. Moreover, recent hawkish comments from European Central Bank (ECB) officials could also strengthen the Euro pair’s recovery. Meanwhile, the US Democrats and Republicans are still at loggerheads over extending the debt ceiling that is currently at a record high. However, ECB President Christine Lagarde expressed “high confidence” that the US will not default on its debts. On the other hand, the ECB’s 0.25% interest rate hike and policymakers’ refusal to pivot or cut rates, except by Governing Council member Mario Centeno, kept the EUR/USD buyers hopeful. Furthermore, hopes that the Euro bloc will be able to avoid a recession also lent strength to the Euro pair’s recovery. However, stronger US economic data in recent days and hawkish comments from Federal Reserve officials challenged EUR/USD’s gains, despite a slow start to the week and the inclusion of preliminary PMI readings for April. On Friday, despite a more-than-expected drop in US retail sales, positive US industrial production data and the University of Michigan (UoM) consumer confidence index allowed the US dollar to recover. In addition to economic data, hawkish comments from Federal Reserve policymakers also helped the US dollar to recover earlier losses. The CME FedWatch tool indicates a near-certain probability of a 0.25% Federal Reserve rate hike in May. However, interest rate futures also indicate a possible rate cut by the end of 2023, while supporting the possibility of a slower rate hike after the next rate hike. In this situation, S&P 500 futures posted an intraday gain of 0.20%, reversing the previous day’s decline from its highest level since early February around 4,172. However, the 10-year and 2-year US Treasury yields eased slightly to around 3.52% and 4.10% respectively, trimming the previous week’s gain of 3.0%. Later, ECB President Lagarde is scheduled to speak again later in the day and could provide some encouragement for EUR/USD traders. However, the main focus will be on this week’s PMIs to confirm the economic recovery hopes, as well as to drive the hawkish Fed expectations and the recent price declines.
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also read : German CPI Rises 7.4 Percent, Euro Moves Higher |
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Technical Analysis
Today, EUR/USD consolidated its intraday losses around 1.0980 as traders look for more clues to extend the previous day’s decline. Concerns about the US economic recovery and uncertainty surrounding the US government debt ceiling extension have weighed on the US dollar and supported the euro pair’s rebound. Recent comments from hawkish European Central Bank (ECB) officials also lent support to the pair. However, stronger US data and hawkish talk from Fed policymakers challenged EUR/USD’s strength. This week, the focus will be on PMIs to confirm economic recovery hopes and drive hawkish Fed bets.
Technical analysis shows that the latest resistance of the Euro pair is around 1.1030-40, while bears are still hopeful.
Warning!
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