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  • Traders wait for key catalysts to push EUR/USD back above weekly lows.
  • With central banks preparing to tighten monetary policy, US Treasury yields rebounded to a three-year high, and global bonds posted their biggest decline.
  • While the US prepares for further sanctions against Moscow, clashes between Russia and Ukraine continue.
  • Amidst Powell’s aggressive remarks, Covid’s resurgence is another catalyst that needs attention.

On Wednesday morning in Europe, the EUR/USD price analysis remains under pressure around 1.1030 as the US dollar resists continuing the previous day’s declines. In addition to cautious sentiment on the part of investors ahead of a speech by Fed Chairman Jerome Powell, bond market losses have also contributed to the decline of the major currency pair.

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Yields soar, bonds crash

While Powell’s comments earlier this week are blamed for the recent bond market plunge, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester. They most recently approved a 50-basis point (bp) rate hike. It is worth noting that rising money market rates on a 190-basis point Fed rate hike in 2022 also weigh US Treasury yields.

Nevertheless, the 10-year US Treasury yield hits its highest level since May 2019 at around 2.41%, while the 2-year yield stands at 2.19% at press time, just hitting a three-year high at 2.198%.

It is difficult for the US dollar to support the rise in Treasury yields as market participants anticipate that central banks will resume normal activity after battling inflationary concerns, hopefully after the war between Ukraine and Russia ends.

Russian war saga

Russia’s ships are playing in Mariupol despite Ukraine’s recent eased stance regarding the brawl between Moscow and Kyiv. Additionally, Western sanctions make the prospects of improvement uncertain. In a recent article, the Wall Street Journal reported that the Biden administration is willing to confiscate Moscow’s gold through the Treasury Department to impose sanctions on more than 300 Russian lawmakers.

Other risk-averse factors

European politicians are divided over Russian sanctions because of their dependence on Moscow’s oil imports. But unfortunately, the same is causing the market to criticize the bloc, especially in light of the upcoming meeting of the Eurogroup.

In addition, there are more Covid variants in Europe and daily viral infections in China, along with new lockdowns, which pose a challenge to market sentiment and EUR/USD buyers.

Stock futures have struggled to keep up with Wall Street’s gains and have put downward pressure on the EUR/USD.

EUR/USD price analysis via daily open interest

The EUR/USD price rose slightly while the open interest slightly decreased. It shows a consolidating price behavior.

What’s next for EUR/USD price analysis?

eur/usd price analysis

Markets are unlikely to be surprised by Powell as he is likely to repeat his earlier hawkish remarks, giving hope to EUR/USD sellers. However, risk catalysts should also be considered.

EUR/USD price technical analysis: Bulls lacking follow-through

eur/usd price analysis

The EUR/USD price is wobbling with the broken ascending trendline and the 20-period SMA on the 4-hour chart. The pair is consolidating in a tight range after it posted some gains from the lows of the 1.0960 area.

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However, the upside remains limited as the volume data gives no clues of bullish momentum. Moreover, the average daily range is only 19%, indicating that the market participants are waiting for a catalyst.

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