EUR/USD Hovers at Three-Week Low Ahead of Key Inflation Data

28 ביולי 2023

The EUR/USD currency pair continues to trade sideways at its lowest level in three weeks, with investors closely awaiting key inflation data from Germany and the US. The recent rate hike by the European Central Bank (ECB) failed to boost the Euro bulls, as concerns about a recession in the bloc persist.

Despite the ECB's rate hike, Euro bulls remained unimpressed, potentially due to a change in the ECB statement and President Christine Lagarde's comments regarding the wording change. The market's positive sentiment, driven by hopes of an earlier end to restrictive monetary policies by major central banks, is weighing on the US Dollar, providing room for a corrective bounce in the EUR/USD pair.

The US Dollar's pullback from a three-week high also contributes to the pair's consolidation of weekly losses. The US Dollar Index (DXY) indicates mild declines around 101.70 after surging to its highest level since July 11. The greenback's gauge against six major currencies experienced its most significant gain since March 15 on the back of upbeat US economic statistics that bolstered Treasury bond yields. Notably, preliminary readings of Q2 US GDP and Durable Goods orders for June were among the positive factors for the DXY.

Meanwhile, Wall Street benchmarks closed with slight daily losses, and the benchmark US 10-year Treasury bond yields recorded their largest daily increase in a month, reaching a three-week high near 4.02%. The S&P500 Futures show mild gains, while the US 10-year Treasury bond yields retreat to 3.99%.

Looking ahead, the market's focus shifts to first prints of German GDP and inflation data, which will be followed by the Fed's Core Personal Consumption Expenditure (PCE) Price Index for June. If the German data reinforces recession concerns and indicates softer inflation, the Euro could potentially touch multi-day lows. On the other hand, the US Dollar may continue its weekly gains if the Core PCE inflation data exceeds the expected 0.2% increase, further supporting the likelihood of a September rate hike by the Fed. Conversely, weaker-than-expected US inflation figures could lead to a decline in the Greenback.



TurnAround Point 1.10200

Our preference

Short positions below 1.10200 with targets at 1.0900 & 1.08650 in extension.