EUR/USD sellers attack 1.0930 support on firmer yields, downbeat ECB concerns, focus on Fed Minutes

• EUR/USD stays depressed even as 100-DMA prods Euro bears after four-week downtrend.
• Economic fears propel bond yields, US Dollar and weigh on Euro price.
• Fears of ECB policy pivot, mostly upbeat US inflation clues allow buyers to stay hopeful.
• Mid-tier US/Eurozone data, FOMC Minutes eyed for clear directions.

EUR/USD drops to the lowest level in a week surrounding 1.0940 as bears keep control amid the early hours of Monday’s Asian session, after a four-week downtrend. That said, the fears of the European Central Bank (ECB) policy pivot join the firmer US Treasury bond yields to exert downside pressure on the Euro pair. However, a light calendar and cautious mood ahead of this week’s top-tier US data, as well as Minutes of the latest Federal Open Market Committee (FOMC) monetary policy meeting, put a floor under the prices.

Although a slight improvement in the German statistics prods the Euro bears, the European Central Bank’s (ECB) monthly Economic Bulletin unveiled a highly uncertain outlook for the bloc’s economic growth and inflation. The publication also mentioned the continuous decline in the “too high inflation”, as well as deterioration in the near-term economic outlook. The same weighs on the EUR/USD price, especially amid firmer US Treasury bond yields and the Greenback.

US 10-year Treasury bond yields rose for the fourth consecutive week despite the initial retreat. With this, US Dollar managed to post a four-week uptrend despite the unimpressive US data.

The US Consumer Price Index (CPI) numbers for July failed to lift the Fed bets for September, suggesting the nearness to the policy pivot. However, the CPI details and other price pressure measures managed to keep the Greenback buyers hopeful. It’s worth noting that the US Producer Price Index (PPI) for July, the preliminary readings of the University of Michigan’s (UoM) Consumer Sentiment Index (CSI) for August and the UoM 5-Year Consumer Inflation Expectations for the said month helped the USD benefit on Friday. Further, the US one-year inflation outlook edged lower to 3.3% from 3.4%.

That said, Federal Reserve (Fed) Governor Michelle Bowman backed additional rate hikes and defended the Fed hawks. However, San Francisco Fed Bank President Mary Daly, Philadelphia Fed Bank President Patrick Harker and New York Fed President John Williams signaled rate cuts in 2024 but also highlighted data-dependency and kept the policy doves looking for more details to confirm the bias.

It should be noted that the geopolitical concerns about China and Russia, as well as looming bond defaults from Beijing, also challenge the sentiment and allow the US Dollar to cheer its haven status.

Against this backdrop, Wall Street closed mixed and the US Treasury bond yields were up whereas the S&P500 Futures remain dicey, mildly bid, at the moment.

Looking forward, the second reading of the Eurozone growth and inflation data will join the US Retail Sales and the Fed Minutes to entertain the EUR/USD traders moving forward. That said, bears will be more interested in witnessing slower inflation/growth from the bloc, as well as the hawkish Fed signals.

Also read: EUR/USD Weekly Forecast: US Dollar to emerge victorious

Technical analysis

A daily closing below the 100-DMA support of 1.0930 becomes necessary for the EUR/USD bears to keep the reins.