EUR/USD gains amid mixed ECB stance on policy easing
|- EUR/USD rises to 1.0784 on mixed central bank remarks and economic data, extending gains for a third day.
- Fed's cautious stance on rate cuts highlighted, with Goolsbee's dovish view contrasting Powell's alignment.
- US Treasury yields hit 2024 peaks, bolstering USD amid varied reactions to CPI updates.
- German inflation continues to drop, sparking ECB's debate on rate adjustment timing.
The EUR/USD rose steadily for the third-straight day in early trading in the North American session, driven by the latest central bank comments from Federal Reserve (Fed) and European Central Bank (ECB) officials. At the time of writing, the pair trades at 1.0784 after hitting a daily low of 1.0762.
Mixed postures amongst Fed, ECB officials keep EUR/USD seesawing below 1.0800
During the last week, Fed policymakers had stressed that it’s too early to cut rates even though the disinflation process continued. On the most “aggressive” dovish side lies Chicago Fed Austan Goolsbee, who remains optimistic about the economy and inflation and has been the most active dove on the board. Other Regional Fed Bank Presidents like Susan Collins, Neil Kashkari, and Thomas Barkin adopted a stance aligned with Fed Chair Jerome Powell. Even when Barkin was asked about Powell’s comments, he said, “Chairman Powell always speaks for the Committee.”
That has driven US Treasury yields higher, with the 10-year note yielding 4.173% after touching 4.195%, the highest level in 2024, a tailwind for the Greenback, which is fluctuating between gains and losses as depicted by the US Dollar Index (DXY). The DXY is clinging to the 104.00 mark, down 0.05%.
Recently, the US Department of Labor revealed the revisions for the US Consumer Price Index (CPI) and confirmed the progress on inflation, as CPI stood at 3.3% YoY, while Core CPI at 3.7%.
Across the pond, Germany’s data revealed that inflation dipped from 3.8% to 3.1% YoY. That maintains the ECB’s progress in curbing inflation. In the meantime, ECB officials Holzmann and Chief Economist Lane remain cautious about opening the door for rate cuts, with the former saying, “There is a certain chance that there will be no interest-rate cut at all this year or only at the very end of the year.” On the dovish side, Kazaks and Villeroy remain optimistic about the disinflation process, maintaining their stance to ease policy.
EUR/USD Price Analysis: Technical outlook
The pair remains downward biased, unable to crack the 200-day moving average (DMA) at 1.0787, which could open the door to challenging 1.0800. Relative Strength Index (RSI) studies remain bearish, with a flattish slope, suggesting that bears remain in charge. Therefore, the path of least resistance is downwards, with the next support emerging at 1.0741, today’s low, followed by the weekly low of 1.0722. Further downside lies at 1.0700.
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