EUR/USD steadies around 1.1350, Fedspeak, ECB’s Lagarde eyed
- EUR/USD treads water, mostly pressured after declining the most in two weeks the previous day.
- ECB policymakers keep taming rate-hike concerns, Fed’s 0.50% lift in March also tested.
- Risk appetite improves after Ukraine requests a meeting with Russia.
- Fed’s Bullard, ECB’s Lagarde will entertain traders, FOMC Minutes becomes the week’s key event.
EUR/USD bears take a breather around 1.1350 heading into Monday’s European session, after positing the heaviest daily fall in two weeks the previous day.
The major currency pair’s recent performance could be linked to the recent market optimism, as well as downbeat comments from the ECB policymakers, amid the sluggish Asian session.
The latest news suggesting Ukraine’s request to Russia for a meeting in the next 48 hours placates market fears of imminent war and tames the US dollar’s safe-haven demand. However, the latest comments from European Central Bank’s (ECB) Governing Council Member Olli Rehn and Gabriel Makhlouf kept pushing back the pair buyers ahead of today’s speech from ECB President Christine Lagarde.
While Irish central bank leader Makhlouf rejected June rate-hike concerns, ECB’s Rehn said, “Overreaction to inflation by the central bank could stem the economic growth,” which in turn tames the rate-hike concerns.
It’s worth noting that the US dollar index rallied on Friday despite downbeat Treasury yields after US President Joe Biden joined political leaders from the UK and EU to highlight risks of immediate Russia-Ukraine war. However, easing chatters over Fed’s 0.50% rate hike in March tamed the EUR/USD losses.
The CME FedWatch Tool suggests nearly 50-50 chances of the 50 basis points (bps) of Fed-rate-hike in March versus a 0.25% move. Previously, especially after the US Consumer Price Index (CPI) release, the market was almost certain of a higher boost to the rates. That said, the preliminary readings of the US Michigan Consumer Sentiment for February eased from 67.2 to 61.7 on Friday.
Against this backdrop, the US 10-year Treasury yields lick their wounds around 1.95%, after shedding over 11 basis points (bps) the previous day. Further, the S&P 500 Futures print mild gains by the press time.
Looking forward, comments from the ECB President Christine Lagarde and St. Louis Fed President James Bullard may offer intraday direction, not to forget geopolitical catalysts. the Federal Open Market Committee (FOMC) Meeting Minutes, up for publishing on Wednesday, will be crucial to watch.
Technical analysis
EUR/USD dropped the most in two weeks the previous day while extending Thursday’s pullback from 1.1485-90 horizontal area established since November 11, 2021.
However, a joint of the 21-DMA and 50-DMA restricts the immediate downside of the stated currency pair to around 1.1330.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
