- EUR/USD fades bounce off intraday low, snaps two-day uptrend.
- Risk sentiment dwindles amid economic concerns over China, UN headlines.
- US data helped Fed to defend an easy money policy, for now.
- Fedspeak, geopolitics and second-tier US economics should offer fresh impulse.
EUR/USD drops back towards the intraday low of 1.2129, down 0.14% on a day, heading into Monday’s European open. In doing so, the currency major pair consolidates gains earned during the previous two-day run-up amid the US dollar’s corrective pullback.
The US dollar index (DXY) rises 0.10% to 90.38 by the press time as market sentiment seeks clear direction after the latest optimism favored bulls. Also challenging the mood could be the downbeat data from China as well as the one-week-old Israel-Palestine tussles.
Although Friday’s downbeat US Retail Sales and Michigan Consumer Sentiment Index, not to forget Industrial Production, saved the Fed policymakers from another laborious day. Markets players reassess the US central bank’s rejection to tapering and/or rate hike odds afterward.
Further, comments from China’s National Bureau of Statistics (NBS) suggesting economic recovery remains uneven, mainly due to the recently sluggish Retail Sales and Industrial Production, also weigh on the sentiment. Elsewhere, the United Nations (UN) rejection to any direct meddling in Gaza, due to the US as per China, joins the coronavirus (COVID-19) woes in Asia and uneven vaccinations, not to forget covid variant woes in the West, to exert additional downside pressure on the previous optimism.
It should, however, be noted that the Fedspeak suggesting the need for “multiple data of more months” for any policy adjustments seem justified, which in turn keeps bears cautious.
Amid these plays, S&P 500 Futures print mild losses whereas the US 10-year Treasury yields drop 1.5 basis points (bps) to 1.62% by the press time.
Looking forward, New York Empire State Manufacturing PMI and US NAHB Housing Market Index for May, expected 24 and 83 versus 26.3 and 83 priors in that order, will decorate the calendar. However, major attention will be given to the Fedspeak. Fed’s Vice Chairman Richard Clarida is likely to reiterate his cautious optimism while defending the no policy adjustments, in absence of which the EUR/USD may witness further downside towards short-term key support.
Technical analysis
A pullback from the 1.2180 hurdle favors EUR/USD sellers targeting an ascending support line from March-end, around 1.2080.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.