- EUR/USD is extending gains to test 1.0600 in the European session
- The US dollar loses further ground amid a risk-on mood at full steam.
- Markets re-price central banks’ tightening plans ahead of US data, Lagarde.
EUR/USD is nearing 1.06000, building onto the Asian rebound in the European session on Monday, as positive global momentum continues and weighs heavily on the safe-haven US dollar.
European stocks climb over 1%, taking the upbeat cues from their Asian and US peers, as investors rethink whether the central banks’ will continue with their aggressive rate-hike track, in the face of slowing economic growth.
Futures pricing shows traders now anticipating the US Fed’s benchmark funds rate stabilizing around 3.5% from March next year, a revision lower from peviously pricing in rates zooming to around 4% in 2023.
Risks of economic contractions in the US and Europe have risen sharply after Russia’s invasion of Ukraine caused consumer prices to surge worldwide, which was well reflected in June business PMI reports released on both sides of the Atlantic last week.
Despite the bullish momentum, buyers seem to be struggling over the last hour, as the rally in the US Treasury yields could be hindering EUR/USD’s journey towards 1.0600.
Attention now turns towards the first-tier US Durable Goods Orders data due on the cards later in the NA session, followed by the Pending Home Sales for a fresh take on the American economic health. Additionally, ECB President Christine Lagarde’s opening remarks at the central bank’s three-day Forum in Sintra this week will be closely eyed.
The main event risk, however, this week will be the policy debate between the chiefs of the Fed, BOE and ECB at the Sintra Forum on Wednesday.