- Comfortably above 1.2100 amid USD consolidation and light trading.
- Eyes on US-German yield differential ahead of inflation figures, Fed.
The EUR/USD pair kicked-off the week on a quiet note, as holiday-thinned markets left the rates fluctuating between gains and losses well above the 1.21 handle, as investors await fresh impetus from the sentiment on the European open ahead of the German Prelim CPI release.
The spot extends its consolidative mode into Asia, having staged a solid recovery from three-month lows of 1.2056 reached in the mid-European session last Friday after the US dollar clocked fresh multi-month tops versus its major rivals.
The USD index spiked to 91.98 levels in tandem with the 10-year Treasury yields after the US Q1 advance GDP numbers topped estimates, coming in at 2.3% q/q vs. 2.0% expectations.
Looking ahead, the major will continue to get influenced by the widening US-DE (German) 10-year yield spread, which sits at the highest levels since 1989 amid divergent monetary policy and inflation outlooks between the Fed and ECB.
Calendar-wise, the focus remains on the German Prelim CPI, dropping in at 12 GMT ahead of the US Core PCE price index and personal spending among other minority reports. The main event risks for this week are likely to be the FOMC policy decision and payrolls, both of which could throw fresh light on the June Fed rate hike prospects.
EUR/USD levels to watch
FXStreet’s Chief Analyst, Valeria Bednarik explains: “A test of the mentioned 1.2160 seems likely, but if sellers reject it from there, lower lows should be expected. In the 4 hours chart, the 20 SMA presents a strong downward slope, converging with the mentioned Fibonacci resistance, while technical indicators corrected extreme oversold readings but stand well below their mid-lines, somehow suggesting that another leg higher is possible as corrective, but overall that the dominant bearish trend is still strong. Support levels: 1.2100 1.2060 1.2020. Resistance levels: 1.2160 1.2200 1.2245.”
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 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.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.