- EUR/USD grinds lower around July 2020 levels, prints three-day downtrend.
- US Treasury yields struggle to remain, test DXY bulls.
- ECB rejects rate hike chatters via downbeat economic forecasts, Fed hawks remain hopeful.
- US data, inflation expectations and China headlines will be important for fresh impulse.
EUR/USD treads water around 1.1440, after refreshing multi-day low to 1.1436 ahead of Friday’s European session. The major currency pair recently tracks a mild pullback in the US Treasury yields amid sluggish trading day ahead of the US data.
That said, the US 10-year Treasury yields struggle to remain firmer around 1.56%, following the biggest daily jump in seven weeks portrayed on Wednesday and Friday’s off in the US bond markets. The same weigh on the US Dollar Index (DXY) as the greenback gauge refreshes intraday low following the jump to renew the highest levels since July 2020.
Behind the latest market moves are the chatters over China’s Evergrande and trade ties with the US, both of which flash grim signals and favor the market’s rush to the risk-safety of late. On the same line were Fed rate hike talks after the US inflation jumped to a 31-year peak.
Furthermore, the EU Commission’s (EC) downward revision to the economic growth forecast for the next year and expectations that the inflation will ease help the bloc’s central bank to defend the easy money policy and avoid rate lift talks.
Alternatively, hopes that the Asia-Pacific markets will rebound, per the global rating agency Moody’s, join the Chinese policymakers’ hopes of overcoming the Evergrande and energy crisis to weigh on the US Treasury yields and the greenback. It’s worth noting that a lack of updates on the US inflation and Fedspeak could also be linked to the latest consolidation in the market sentiment.
Even so, the EUR/USD bears remain hopeful as the US inflation expectations remain steady near a 15-year high. The same line highlights today’s US Michigan Consumer Sentiment for November, expected 72.4 versus 71.7 prior, for fresh impulse.
A convergence of a five-month-long descending trend line and high marked in June 2020 becomes a tough nut a crack for the EUR/USD sellers around 1.1420-10 zone. On the other hand, corrective pullback remains less lucrative until the quote stay below one-month-old horizontal resistance, previous support around 1.1530.