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  • EUR/USD prints three-day uptrend, mildly bid off-late.
  • DXY drops to fresh three-week low on downbeat yields, vaccine jitters and strong US CPI.
  • Market sentiment dwindles amid quiet Asian session, light calendar.
  • Fed’s Powell may cheer recently upbeat data but can’t disagree with ECB’s Lagarde over need of easy money.

EUR/USD prints 0.10% intraday gains while easing to 1.1958 ahead of Wednesday’s European session. Although broad US dollar weakness could be cited as the major theme behind the quote’s three-day run-up, cautious sentiment ahead of the speeches from the ECB and the Fed leaders, Christine Lagarde and Jerome Powell respectively, can also be cited for the pair’s latest pullback.

The US dollar index (DXY) stays depressed around the lowest since March 22 while extending the previous day’s losses. The greenback gauge declined on Tuesday after US Consumer Price Index (CPI) data for March came in stronger than expected while the 30-year bond auction gained a strong response.

Also negatively affected the greenback could be the halt in the usage of Johnson & Johnson’s coronavirus (COVID-19) vaccines in all 50 US states after blood clotting issues. While the news may have fewer negatives for America, whereas other top-tier vaccines are ample in supply, Europe may suffer amid ongoing vaccine jitters over AstraZeneca with the UK.

It’s worth mentioning that China’s Premier Li Keqiang told a group of senior U.S. executives on Tuesday, per Reuters, that China and the United States should step up their communication while managing their differences and respecting each other’s core interests. However, the news may not impress market optimists amid calls of Beijing’s building of ‘destructive missiles & lasers’ to ‘blind US spacecraft sensors,’ per The Sun.

Amid these plays, stock futures wobble for clear direction whereas the US 10-year Treasury yield remains pressured around 1.62%, following 5.6 basis points (bps) of declines the previous day.

Looking forward, ECB’s Lagarde may try to paint a rosy picture of the bloc economy based on the recent positive data. Though, she may not risk supporting the tapering or tighter monetary policy. On the other hand, Fed’s Powell could keep placating the bond bears while also praising the latest figures.

Other than Lagarde and Powell, some second-tier policymakers from both the central banks are also up for speaking, ahead of the monthly Beige Book from the Fed. However, they may not have the liberty to entertain markets.

Technical analysis

The EUR/USD pair’s ability to stay strong beyond 200-day SMA, backed by the strongest bullish MACD signals since early December 2020 suggests the quote’s further upside. Though, a clear run-up past-50-day SMA level of 1.1965 becomes necessary for the EUR/USD buyers before confronting a horizontal area comprising multiple levels marked in March, around 1.1988-95. Meanwhile, a daily close below the 200-day SMA level of 1.1906 can recall EUR/USD sellers targeting the early March low near 1.1835.