- EUR/USD retreats towards intraday low, snaps two-day uptrend at monthly peak.
- US dollar tracks a pause in Treasury yields, anxiety ahead of the key data/events to pare losses at one-month bottom.
- Buyers cheered hawkish ECBspeak previously, highlighting Lagarde’s speech.
- FOMC Minutes, US Durable Goods Orders for April will be eyed as economic fears test Fed’s hawkish drive.
EUR/USD drops back to 1.0700 during the first negative day of the week, retreating from the monthly high while snapping a two-day run-up. That said, the quote’s latest weakness could be linked to the US dollar’s recovery amid mixed sentiment and anxiety ahead of the key data/events during early Thursday in Europe.
That said, doubts over the European growth, despite the recently hawkish comments from the Eurozone policymakers, also weigh on the EUR/USD prices.
The US Dollar Index (DXY) rises 0.21% intraday while bouncing off a four-week low to regain the 102.00 threshold. The DXY rebound tracks the US 10-year Treasury yields, bouncing off the monthly low while rising 0.8 basis points (bps) to 2.767%. Underlying the rebound in the yields could be the risk-negative headlines from China and South Korea, as well as the market’s preparations for the US Durable Goods Orders for April, expected 0.6% versus 1.1% prior, as well as the Federal Open Market Committee (FOMC) Minutes.
Previously, the biggest monthly fall in the US New Home Sales in nine years joined downbeat preliminary activity data to portray grim concerns for the world’s largest economy, which in turn drowned the US dollar.
Also, European Central Bank (ECB) President Christine Lagarde and Vice President of the European Commission Valdis Dombrovskis portrayed the bloc’s economic resilience and propelled the Euro versus the greenback. Further, German PMI was firmer for May while the Eurozone numbers were softer-than-expected but couldn’t detail the EUR advances. It should be noted that some of the ECB policymakers have uttered the 50 bps rate hike calls for July and offered notable strength to the Euro.
That said, the EUR/USD pair’s short-term moves rely on the ECB versus Fed divergence, which in turn highlights today’s FOMC Minutes and US Durable Goods Orders, not to forget German GfK sentiment figures, GDP data and a speech from ECB President Lagarde.
Also read: Read: FOMC May Minutes Preview: Will the Fed have to sell MBS?
Technical analysis
EUR/USD seesaws around the 11-week-old resistance-turned-support line, near 1.0710 by the press time, amid firmer RSI (14). Hence, sellers need to conquer the immediate support, as well as break the 1.0700 round figure, to aim for the early month’s peak of 1.0641 and an upward sloping support line from May 13, close to 1.0570.
Alternatively, the 50-DMA level of 1.0765 challenges the short-term upside of the EUR/USD pair ahead of a downward sloping trend line from February, near 1.0840.