- EUR/USD fades bounce off weekly low, offered for the second consecutive day.
- DXY tracks US Treasury yields to defend 90.00, trade news, Fedspeak entertain markets.
- German data, US Durable Goods Orders and central bankers eyed.
EUR/USD remains sidelined below 1.2200, picking up bids of late, heading into Thursday’s European session. The major currency pair dropped to the weekly low, before bouncing off 1.2175, during the choppy session in Asia. Even so, upbeat Treasury yields stop the sellers amid offbeat market sentiment.
While tracing the clues, comments rejecting the need for tapering from the officials of the US Federal Reserve (Fed) and the European Central Bank (ECB) gain major attention. Vice-Chairman for Supervision Randal Quarles said, per Reuters, “The time for discussing rate hikes is still far in the future and reiterated that the policy will remain highly accommodative for some time.” On the same line, ECB’s Fabio Panetta downplayed expectations about rising inflation in his interview on Wednesday.
Additionally, the US-China jitters surrounding trade deal and the coronavirus (COVID-19) join vaccine optimism in the bloc, as well as in America, add to the market’s favor for the US Treasury yields, currently up for the second day near 1.58%. The same results in the US dollar index (DXY) ability to defend the 90.00 psychological magnets while keeping the previous day’s bounce off early January low.
Amid these plays, stock futures remain pressured and keep the EUR/USD bounce limited.
Moving on, updates over the Sino-American trade deal and US President Joe Biden’s infrastructure spending plan will join the comments from the Fed and the ECB policymakers to entertain EUR/USD traders.
On the data side, the German Gfk Consumer Confidence Survey for June, expected -5.2 versus -8.8 prior, will precede the US Durable Goods Orders for April, market forecast +0.7% versus +1.0% previous readouts. Should the scheduled releases keep markets optimistic, EUR/USD may have a further downside to witness ahead of Friday’s key Personal Consumption Expenditure (PCE) Price Index for April.
Read: US Durable Goods Orders April Preview: Jobs should equal spending
Technical analysis
EUR/USD needs to ignore bearish MACD signals and cross the 50-SMA level of 1.2202 to keep buyers hopeful, failing to which could propel the quote to a one-week-old horizontal resistance around 1.2245. Meanwhile, a clear downside break of an ascending support line from May 17 near 1.2185 will drag the EUR/USD prices to a 100-SMA level of 1.2150.
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