- EUR/USD pauses two-day recovery from the lowest levels in a fortnight amid cautious markets.
- ECB policymakers advocate higher rates, rule out rate cuts but German Bunds renew recession fears.
- US data will allow Fed Chair Powell to sound hawkish, suggesting pullback in Euro pair.
- ECB President Lagarde’s speech, second-tier German data also eyed for clear directions.
EUR/USD bulls take a breather around 1.0960 after posting the biggest daily gain in a week during a two-day run-up. That said, the Euro pair cheered the hawkish commentary from the European Central Bank (ECB) officials the previous day while paying little heed to the upbeat US data. However, the cautious mood ahead of the key speeches from the top-tier central bankers including ECB President Christine Lagarde and Federal Reserve (Fed) Chairman Jerome Powell at the ECB Forum in Sintra prods the major currency pair’s further upside.
On Tuesday, European Central Bank (ECB) President Christine Lagarde said, “We need to bring rates into “sufficiently restrictive” territory to lock in our policy tightening.” The policymaker also added that, “It is unlikely that in the near future the central bank will be able to state with full confidence that the peak rates have been reached.”
On the same line, ECB policymaker Matin Kazaks said on Tuesday that he sees the central bank raising interest rates beyond the July meeting if inflation remains too high. ECB’s Kazaks also defied the market bets on rate cuts in early 2024.
Earlier in the week, Germany's Bundesbank ruled out recession woes in its monthly report by saying that the German economy appears to have bottomed out and is forecast to post a small growth in the Gross Domestic Product (GDP) in the second quarter (Q2).
On the other hand, a slew of the US data allowed the US Dollar to pare intraday losses during late Tuesday but failed to reverse the daily loss of the greenback amid optimism. That said, US Durable Goods Orders marked a surprise growth of 1.7% for May versus -1.0% market forecasts and 1.2% prior (revised). Further, the US Conference Board's (CB) Consumer Confidence Index rose to 109.7 for June from 102.5 in May (revised from 102.3). On the same line, US Housing Price Index rose to 0.7% in April from 0.5% in previous readings (revised), versus the 0.3% expected. Meanwhile, the S&P/Case-Shiller Home Price Index came in as -1.7% YoY for April, down from -1.1% prior but better than -2.6% market forecasts. Additionally, New Home Sales rose 12.2% MoM in May from 3.5% prior and 0.5% anticipated whereas the Richmond Fed Manufacturing Index improved to -7.0 in June compared to -15.0 prior and -10.0 expected.
Furthermore, headlines suggesting Asian lobbyists are advocating for easier rules for Chinese equities’ overseas listing and comments from Premier Li Qiang joined the People’s Bank of China’s (PBoC) lower-than-expected fixing of the USD/CNY price to favor the optimism. Further, the US Dollar selling by major Chinese state banks, per Reuters, also allowed the EUR/USD pair to remain firmer.
While portraying the mood, Wall Street closed with notable gains for the first time in three days while the US Treasury bond yields recovered.
Looking ahead, Germany’s GfK Consumer Confidence Survey data for July may entertain Euro traders ahead of the speeches from Fed Chair Powell and ECB’s Lagarde. Should the policymakers remain hawkish, the EUR/USD has more odds to ease amid recent fears of recession backed by downbeat German Bund market signals.
Technical analysis
A successful rebound from a two-month-old previous resistance line and the 50-day Exponential Moving Average (EMA), respectively near 1.0865 and 1.0850, directs EUR/USD bulls toward the monthly high of around 1.1015. However, the 1.1000 round figure caps the Euro pair’s immediate upside.
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
![EUR/USD remains side-lined around 1.0480](https://editorial.fxsstatic.com/images/i/EURUSD-bearish-object_Medium.png)
EUR/USD remains side-lined around 1.0480
Price action in the FX world remains mostly subdued amid the lack of volatility and thin trade conditions following the US Presidents' Day holiday, with EUR/USD marginally down and flat-lined near 1.0480.
![GBP/USD keeps the bullish bias above 1.2600](https://editorial.fxsstatic.com/images/i/GBPUSD-bullish-object-1_Medium.png)
GBP/USD keeps the bullish bias above 1.2600
GBP/USD kicks off the new trading week on a positive foot and manages to reclaim the 1.2600 barrier and beyond on the back of the Greenback's steady price action.
![Gold resumes the upside around $2,900](https://editorial.fxsstatic.com/images/i/Commodities_Gold-1_Medium.jpg)
Gold resumes the upside around $2,900
Gold prices leave behind Friday's marked pullback and regain some composure, managing to retest the $2,900 region per ounce troy amid the generalised absence of volatility on US Presidents' Day holiday.
![Five fundamentals for the week: Peace talks, Fed minutes and German election stand out](https://editorial.fxsstatic.com/images/i/Ukraine_Medium.png)
Five fundamentals for the week: Peace talks, Fed minutes and German election stand out Premium
US President Donald Trump remains prominent, especially in a week when high-level peace talks kick off. Nevertheless, the Commander-in-Chief competes with the world's most powerful central bank, and other events are of interest as well.
![Bitcoin Price Forecast: BTC stalemate soon coming to an end](https://editorial.fxsstatic.com/images/i/BTC-neutral-object_Medium.png)
Bitcoin Price Forecast: BTC stalemate soon coming to an end
Bitcoin price has been consolidating between $94,000 and $100,000 for almost two weeks. Amid this consolidation, investor sentiment remains indecisive, with US spot ETFs recording a $580.2 million net outflow last week, signaling institutional demand weakness.
![The Best Brokers of the Year](https://editorial.fxsstatic.com/images/Brokers/Editors_Pick_Box_395x179_Medium.png)
The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.