- EUR/USD attempts to gain but fails to do so and is back to yearly lows.
- The US yields are struggling to hold ahead of key US data.
- US-China trade tension may weigh on the Euro.
The EUR/USD outlook remains broadly negative, ending the week near the fresh yearly lows. However, we may expect some upside correction.
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The EUR/USD price climbs to 1.1440 after hitting multiday lows of 1.1436 ahead of Friday’s European session. Before the release of the US data, US Treasury bond yields declined modestly in the major currency pair.
The 10-year Treasury yield struggled to hold around 1.56% despite its largest daily jump in seven weeks in US bond markets on Wednesday and Friday. US Dollar Index (DXY) will also be affected, as the Dollar Indicator will update its intraday lows after the jump to refresh its highest levels since July 2020.
The greatness of China and trade relations with the US are sending out dark signals and encouraging the market to hedge risks, which resulted in the recent market move. After US inflation hit a 31-year high, there was talk of a Fed rate hike.
In addition, the downward revision of economic growth forecasts for the next year by the European Commission, along with the expectation of lower inflation by the central bank, will help defend an easy money policy and avoid rate negotiations.
Moody says China’s policymakers are hoping to overcome Evergrande and the energy crisis to put pressure on US Treasury and dollar yields at the same time as they hope for a recovery in Asia-Pacific markets. There is also a possibility that the recent consolidation in market sentiment is related to the lack of current information on US inflation and the Fed’s speeches.
Nonetheless, the EUR/USD bears remain encouraging as inflation expectations in the US remain stable and near a 15-year high. The same line reflects today’s Michigan consumer sentiment for November, which is forecast for renewed momentum at 72.4 versus 71.7.
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EUR/USD price technical outlook: Bearish dominance to stay alive
The EUR/USD price attempted to gain momentum but failed to project gains above the 1.1450 area. The price has been wobbling around the yearly lows. The down bar comes with a very high volume, indicating bearish dominance. The average daily range is quite low, around 30%. It shows that the market is boiling up for a big move ahead.
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Saqib Iqbal
