EUR/USD slips further from 1.0900 amid risk-aversion, strong USD

EUR/USD slips further from 1.0900 amid risk-aversion, strong USD
  • Global market sentiment is cautious, with equities declining and bond yields rising, as investors anticipate further monetary tightening by central banks.
  • July’s Fed minutes reveal a unanimous decision for a rate hike but growing caution among board members about potential over-tightening.
  • US data: Initial Jobless Claims slightly better than expected at 239K; Philadelphia Fed Manufacturing Index for August shows improvement.
  • Eurozone reports a trade surplus of €23B, surpassing expectations. Upcoming data includes July’s Harmonized Index of Consumer Prices (HICP).

EUR/USD registers modest losses for the fifth straight day, widening its distance from the 1.0900 figure amid a risk-off impulse spurred by the Federal Reserve (Fed) meeting minutes, as well as woes of China’s economic slowdown.

Federal Reserve minutes and China’s economic slowdown weigh on the pair, while positive US data and EU trade balance provide limited support

The market sentiment remains downbeat, with global equities slumping while bond yields rise. Investors continued to assess that central banks could continue to tighten monetary conditions.

July’s Fed minutes showed the board members raised rates unanimously, even though some are leaning neutral, expressing worries about lifting rates too high. Most policymakers still see upside inflation risks, yet officials are taking a cautious approach to setting monetary policy, as they emphasized they would consider the “totality” of data to “help clarify the extent to which the disinflation process was continuing.”

Following Wednesday’s data release, the Atlanta Fed GDPNow model portrays the US Q3 2023 GDP at around 5.8%, up from 4.1% on August 8. Given those developments, the swaps market has shown increased chances for a Federal Reserve 25 bps rate hike at the upcoming November meeting.

On Thursday, the US Bureau of Labor Statistics (BLS) showed the last week’s Initial Jobless Claims, which fell to 239K, a tick lower than forecasts of 240K. At the same, the Philadelphia Fed Manufacturing Index for August improved, with numbers hitting 12, exceeding the -10 contraction expected by analysts.

On the Eurozone (EU) front, the Trade Balance depicted a surplus of €23B, exceeding estimates of €18.3B. Before the weekend, the EU would report the Harmonized Index of Consumer Prices (HICP) for July, with estimates of 5.3% YoY and 0.3% MoM. Core HICP is expected to remain sticky at 5.5% YoY.

EUR/USD Price Analysis: Technical outlook

EUR/USD Daily chart

EURUSD is set to test the July 6 daily low of 1.0833 in the near term. Still, the EUR/USD 1.0800 figure should be up for grabs, followed by the 200-day Moving Average (DMA) at 1.0787. further downside is expected below the latter, as the 1.0700 psychological level would be up next. Conversely, the EUR/USD first resistance emerges at 1.0900, followed by the 50-DMA at 1.0974.

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.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *