- EUR/USD bounces off intraday low but keeps the previous day’s pullback from March 04 top.
- Fears of delay in economic recovery magnified on downbeat vaccine updates, US-Russia and Sino-American tussles also weigh on sentiment.
- German 10-year bund yield consolidates the heaviest losses in seven weeks, US Treasury yields recover from one-month low.
- Eurozone Final CPI, US Michigan Consumer Sentiment Index will be important but risk catalysts occupy driver’s seat.
EUR/USD licks its wounds around 1.1955 while heading into Friday’s European session. In doing so, the major currency pair drops for the second consecutive day, down 0.10% intraday by the press time.
German bund yield’s decline from the one-month top, with the biggest daily losses since early March, triggered the quote’s pullback from a seven-week top and snapped a three-day uptrend on Thursday. The corrective moves gain extra support from increasing odds of the bloc’s delay in the economic recovery as the coronavirus (COVID-19) vaccine shortages are the key challenge for Brussels.
Bloomberg came out with the news suggesting an extended ban over the use of Johnson & Johnson’s covid vaccine by the US Centers for Disease Control and Prevention (CDC) early Friday. While the news may have a little impact on the US and the UK, due to enough jab stock on their hands, Reuters cites the delay in the vaccinations as the biggest risk to the Eurozone economy.
It’s worth mentioning that the US sanctions on Russia and US-Japan tie to battle with China adds to the market’s risk-off mood and helps the US dollar index (DXY) to extend the previous day’s recovery moves.
Amid these plays, the S&P 500 Futures drop 0.16% from the all-time high flashed the previous day whereas the US 10-year Treasury yield gains over five basis points (bps) to 1.58% by the press time.
On Thursday, firm inflation data from Germany couldn’t help the regional currency as Italy’s another growth forecast downgrade and the escalation of the covid cases in the bloc weighed on the EUR/USD. Also teasing the pair sellers were the strong US data and upbeat Wall Street performance portrayed the previous day.
Looking forward, the final reading of March’s Eurozone Consumer Price Index (CPI), expected to confirm 1.3% YoY figures, can entertain intraday EUR/USD traders but the US data will be more important to follow for fresh direction. Additionally, updates over the vaccine and the regional economic play, amid the push for more stimulus, will also be the key.
Read: US Michigan Consumer Sentiment April Preview: Happiness is on the way
Technical analysis
Thursday’s pullback from a horizontal area comprising multiple levels marked since March 02 portrayed a bearish spinning top candlestick on the EUR/USD daily chart, which in turn suggests the traders’ indecision below the key 1.2000 hurdle. However, 50-day SMA and a 2.5-month-old support line, respectively around 1.1960 and 1.1950, keeps the pair sellers away.
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