- EUR/USD prints seven-day uptrend, pokes monthly top of late.
- DXY keeps diverging from US Treasury yields amid Fed tapering, Evergrande headlines.
- ECB policymakers try to placate reflation fears but firmer data probes policy doves.
- Risk catalysts, second-tier US data and Eurozone Consumer Confidence eyed for fresh impulse.
EUR/USD flirts with the monthly high near the 1.1670 hurdle, taking rounds to 1.1665 ahead of Thursday’s European session. The major currency pair rises for the seventh consecutive day with this pattern as the US Dollar Index (DXY) refreshes a three-week low despite firmer Treasury yields.
The US Dollar Index (DXY) fails to benefit from the consolidation in the market sentiment, printing a seven-day downtrend to a fresh three-week low near 93.50 by the press time. That being said, the US 10-year Treasury yields remain firm around 1.67%, up three basis points (bps) to refresh the highest levels since May.
Tapering signals from Federal Reserve Governor Randal Quarles and Cleveland Fed President Loretta Mester have been the latest to pump the US 10-year Treasury yields. However, the same couldn’t help the EUR/USD sellers as firmer Euro-zone inflation figures dim the European Central Bank (ECB) policymakers’ efforts to tame the hawkish bets.
On Wednesday, the final reading of the bloc’s Consumer Price Index (CPI) for September grew past 0.4% initial estimate to 0.5% MoM while matching 3.4% forecasts. Following that, the ECB’s Francois Villeroy de Galhau and Pierre Wunsch tried their best to defy the monetary policy tightening but couldn’t convince markets.
It’s worth noting that US President Joe Biden’s attempts to convince markets of upcoming stimulus failed to recall the greenback buyers as upbeat equities derail the USD’s safe-haven demand.
Looking forward, US Jobless Claims, Philadelphia Fed Manufacturing Index and Existing Home Sales may entertain short-term EUR/USD traders ahead of the Eurozone’s preliminary Consumer Confidence data for October. Above all, Friday’s activity numbers and chatters surrounding the Fed, ECB and China will be the key for the pair. Additionally, the US Treasury yields should be watched carefully as a clear break of 1.70% triggered the US dollar rally in the past.
Technical analysis
EUR/USD needs a daily closing beyond 1.1670, comprising August lows, to aim for the September 22 swing bottom around 1.1685 and 50% Fibonacci retracement (Fibo.) of July-October upside near 1.1715. However, failures to do so may not necessarily recall the bears until the quote stays beyond 1.1615 support confluence including 21-DMA, as well as 23.6% Fibo.