EUR/USD steadies around 1.2070 following sharp decline

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  • EUR/USD remains on track to close the day deep in the negative territory.
  • Annual CPI inflation in US jumped to 4.2% in April.
  • US Dollar Index gains more than 0.5% on Wednesday.

The EUR/USD pair spent the first half of the day moving sideways in a relatively tight range above 1.2100 on Wednesday but came under strong pressure during the American trading hours. As of writing, the pair, which touched a daily low of 1.2066, was down 0.58% on a daily basis at 1.2075.

USD gathers strength on the back of rising T-bond yields

The highly-anticipated inflation data from the US showed on Wednesday that the Consumer Price Index (CPI) in April jumped to 4.2% on a yearly basis from 2.6% in March. This reading surpassed the market expectation of 3.6%. Moreover, the Core CPI, which excludes volatile food and energy prices, climbed to 3% from 1.6%, compared to analysts’ estimate of 2.3%.

The US Treasury bond yields surged higher after this report and provided a boost to the greenback. With the benchmark 10-year US T-bond yield rising more than 3% on the day, the US Dollar Index is up 0.62% at 90.73.

There won’t be any macroeconomic data releases featured in the European economic docket on Thursday and the USD’s market valuation is likely to continue to drive EUR/USD’s action. In the second half of the day, the Producer Price Index (PPI) data from the US will be looked upon for fresh impetus. A similarly strong PPI reading is likely to help the USD continue to outperform its rivals. The US Department of Labor will release its weekly Initial Jobless Claims data as well.

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