- US dollar tumbles across the board amid risk appetite.
- Euro turns positive versus the dollar and negative against the pound.
The EUR/USD is rising modestly on Wednesday after making a rebound from 1.1615. During the American session, the pair climbed to 1.1651, slightly below the daily highs. The euro remains unable to break the 1.1650 barrier.
DXY drops as EUR/USD rebounds
The EUR/USD erased daily losses amid a decline of the greenback across the board. A risk-on mood across financial markets weighs on the dollar. The DXY is falling by 0.15% even as US yields hold around monthly highs.
On Wall Street stocks are rising. The Dow Jones gains 0.35% and the Nasdaq 0.08%. Crude oil prices are up, with WTI rising 0.60%. Gold gains more than 10$. Positive corporate results contribute to optimism. Later on Wednesday, the Federal Reserve will release the Beige Book.
From a technical perspective, the recovery of EUR/USD remains capped by the 1.1650 area. A break higher should clear the way to more gains, exposing Monday’s high of 1.1669. On the flip side, 1.1615 is the daily low, a support area and also the 20-day moving average. A daily close clearly below should weaken the euro.
Technical levels
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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