EUR/USD portrays pre-ECB anxiety around 0.9900, yields weigh on DXY ahead of US GDP
- EUR/USD prints four-day uptrend as buyers jostle with four-month-old resistance line.
- Lack of major data/events restricts immediate moves ahead of ECB, US GDP.
- Hawkish central bank bets, downbeat PMIs fail to entertain bears.
- Bulls would like to hear more about ECB’s QT as 75 bps rate hike is already given.
EUR/USD bulls struggle to keep the reins, despite printing a four-day uptrend around the fortnight top near 0.9900. In doing so, the major currency pair traces the sluggish markets heading into Tuesday’s European session.
It should, however, be noted that the US dollar’s weakness amid softer yields and an absence of Fedspeak allowed the buyers to keep the reins. Also likely to favor the upside momentum could be cautious optimism in the Asian session due to gains from China and Japan.
Furthermore, talks that the European Central Bank (ECB) is up for rolling back the bond actions to overcome covid-led woes, known as Quantitative Tightening (QT), also seem to underpin the EUR/USD upside momentum.
Additionally, the latest comments from the Fed policymakers haven’t been impressive amid concerns over easing the rate hike, which in turn allow the US dollar to retreat from the multi-year high. That said, the US Dollar Index (DXY) remains on the back foot around 111.85, taking rounds to intraday low while struggling to extend the week-start gains amid downbeat Treasury bond yields and cautious optimism in the markets.
The US 10-year Treasury yields remain pressured around 4.21%, down two basis points (bps) while the US stock futures and stocks in the Asia-Pacific region are mildly bid.
Moving on, Germany’s IFO sentiment figures for October will precede the second-tier US Housing data and Consumer Confidence to direct short-term EUR/USD moves. However, the pair is less likely to print any major moves, unless surprises erupt, but the buyers may keep the reins as the Fed hawks are obverting the pre-meeting silence period.
On Monday, fears of more tension concerning the West versus Russia issue and downbeat activity numbers for October, from the US, the UK and Europe, as well as Germany, favored the pair bears.
Technical analysis
EUR/USD pullback remains elusive beyond the one-month-old trend line support, close to 0.9700 at the latest. Meanwhile, a downward-sloping resistance line from early June around 0.9900 appears the key hurdle for the bulls before they challenge the monthly top near the parity level.