- EUR/USD prints three-day rebound from yearly low, refreshes daily high.
- US Dollar tracks downbeat Treasury yields, ignores mildly offered stock futures.
- Fed tapering tantrums in focus, ECB may have less audience despite reflation fears.
- US PPI, ZEW sentiment figures are also important for fresh impulse.
EUR/USD takes the bids near 1.1600 to portray a three-day advance from the year’s low ahead of Tuesday’s European session.
The major currency pair takes clues from the downbeat US Treasury yields and cautious optimism in the market to consolidate the recent losses. However, speeches from the Chiefs of the European Central Bank (ECB) and the US Federal Reserve (Fed) will be important to forecast near-term moves.
Indecision over tapering and rate-hike concerns join the anxiety over the Fed reshuffle to portray the latest sluggish mood in the market. Also acting as an important factor is the recently announced stimulus from Japan. “Japan's ruling Liberal Democratic Party (LDP) and coalition partner Komeito agreed to offer 50,000 yen ($441) worth of vouchers to children aged 18 or younger as part of the government's stimulus package, Jiji news agency reported on Tuesday,” per Reuters.
It’s worth noting that inflation fears remain on the table and keep the US dollar buyers hopeful following the strong US jobs report for October, published Friday. The same could be sensed in the latest Fedspeak and comments from the ECB policymakers. However, there is a wide divide among the policymakers on how long the reflation fears can last and the need to address them with the rate hikes, which in turn troubles the EUR/USD traders of late despite the recent run-up.
Against this backdrop, stock futures in the US and Eurozone print mild losses while the US 10-year Treasury yields drop three basis points (bps) to 1.467% at the latest.
In addition to the monetary policy signals from Fed’s Powell and ECB’s Lagarde, ZEW sentiment numbers for Eurozone and Germany for November will precede the US Producer Price Index (PPI) for October to entertain the EUR/USD traders. Should the scheduled data keep pointing at the heating price pressure in Eurozone, the odds of the EUR/USD pair’s further upside can’t be ruled out.
Technical analysis
EUR/USD keeps the previous day’s upbeat break of a downward sloping trend line from October 28 amid price-positive signals from the RSI and Momentum indicators. It should be noted, however, that the pair buyers remain worried below the descending resistance line from early September, near 1.1650.
