EUR/USD - Focus on ISM PMI, US-German yield spread contradicts rally

EUR/USD regained the 1.19 handle.
PMI day ahead.
US-German yield spread could spike in USD positive manner.

Omkar Godbole FXStreet Contributor

The EUR/USD rose above 1.19 handle and in the process left another higher low on the daily chart as the Eurozone employment and inflation numbers showed the 17-nation currency bloc is moving in the right direction.

Focus on PMIs

Kathy Lien from BK Asset Management writes, " Revisions to November PMIs are due for release on Friday. It is difficult to predict the direction of any revisions but if changes are made, they could have a near-term impact on the euro."

In the US session, all eyes would be on the US Nov. ISM manufacturing figure. It is expected to show the pace of expansion in the activity remained largely unchanged. The bid tone around the USD could strengthen if the details of the ISM index show labor market remains strong. Also, the tax bill uncertainty could cap the downside in the EUR/USD.

US-German yield differential contradicts uptick in EUR/USD

The 10-year US-German yield differential rose to a one-month high of 203.9 basis points yesterday. The widening of the yield spread in the USD positive manner puts a question market on the sustainability of the EUR/USD rally.
The spread could witness an upside break (move above 204.2 basis points) if the ISM manufacturing PMI betters estimates.

EUR/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes-

"The price is holding just a handful of pips above a bearish 20 SMA, while technical indicators turned south within positive territory, now nearing their mid-lines. The pair is midway of its weekly range, clearly showing the absence of a defined trend. Whereas above 1.1960 or below 1.1790 the outlook will be more defined, seems the market will wait for December Fed and ECB's monetary policy announcements before choosing a side."

Support levels: 1.1860 1.1820 1.1785

Resistance levels: 1.1930 1.1960 1.2000

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD hovers around 1.1850 ahead of FOMC Minutes

EUR/USD stays on the back foot around 1.1850 in the European session on Wednesday, pressured by renewed US Dollar demand. Traders now look forward to the Minutes of the Fed's January monetary policy meeting for fresh signals on future rate cuts.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.