- EUR/USD attracts fresh buyers on Wednesday amid a modest USD downtick.
- Fed rate cut bets keep the US bond yields depressed and undermine the buck.
- Wednesday’s US data might provide some impetus ahead of the ECB on Thursday.
The EUR/USD pair builds on the overnight bounce from the 1.0860-1.0855 region and ticks higher during the Asian session on Wednesday amid subdued US Dollar (USD) price action. Spot prices currently trade just below the 1.0900 mark and remain well within the striking distance of the highest level since March 21 touched on Tuesday.
The incoming softer US macro data pointed to signs of a cooling economy and cemented bets for an imminent interest rate cut by the Federal Reserve (Fed) later this year. The expectations keep the US Treasury bond yields depressed and undermine the USD, which, in turn, is seen lending some support to the EUR/USD pair. The upside, however, seems limited as traders might prefer to wait on the sidelines ahead of the crucial European Central Bank (ECB) monetary policy meeting on Thursday.
As widely signalled in recent weeks by policymakers, the ECB is more likely to cut interest rates by 25 basis points at the end of its June 6 meeting. This will mark the first cut since March 2016 and will be accompanied by the latest economic projections. This, along with comments by ECB President Christine Lagarde will be scrutinized for cues about future rate cuts on the back of a rise in Eurozone inflation in May. This, in turn, will play a key role in driving the shared currency and the EUR/USD pair.
The market attention will then shift to the release of the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday. The crucial US jobs data might influence expectations about the Fed's next policy move and the USD. Heading into the key central bank event and US macro data risks, Wednesday's US economic docket, featuring the ADP report and ISM Services PMI, might produce short-term opportunities around the EUR/USD pair.
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
AUD/USD trades sideways around 0.6850, focus shifts to US NFP
AUD/USD is trading sideways at around 0.6850 in Friday's Asian trading, consolidating the latest uptick. The pair finds support from a minor US Dollar pullback but persisting Middle East tensions and pre-US NFP data nervousness keep the higher-yielding Aussie pair's rebound in check.
USD/JPY holds lower ground near 146.50, awaits US NFP report
USD/JPY has come under pressure in the Asian session on Friday, holding lower ground near 146.50. Bulls seem reluctant to place fresh bets ahead of the release of the US NFP report. Japanese officials' comments support the Yen amid a cautious risk tone.
Gold price remains range bound, looks to US NFP report for fresh directional impetus
Gold price remains confined in a narrow trading range amid mixed fundamental cues. Geopolitical risks lend support to the metal, though the recent USD strength caps gains. Traders also seem reluctant and look to the US NFP report before placing directional bets.
Nonfarm Payrolls Cheat Sheet: Five scenarios for Gold, Indices and Forex Premium
Jobs, jobs, jobs – that is the focus for the Federal Reserve and for almost all tradable assets. The release is critical for the next Fed decision, with markets split about whether the bank will cut interest rates by 25 or 50 basis points.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.