EUR/USD turns defensive around 1.0300 with eyes on EU/US PMIs, Fed Minutes
- EUR/USD fades corrective bounce from one-week low ahead of key data/events.
- Market sentiment improved despite no major positives, equities stayed firmer, yields eased.
- Eurozone Consumer Confidence, US Richmond Fed Manufacturing Index improved.
- Preliminary activity data for November will precede US Durable Goods Orders for October and Fed Minutes to entertain traders.
EUR/USD buyers take a breather ahead of an eventful day, steady around 1.0300 during Wednesday’s Asian session after snapping three-day downtrend the previous day. That said, firmer risk profile allowed the pair buyers to battle against the sellers the previous day. However, a slew of data/events are up for publishing today and hence cautious mood probe the momentum traders of late.
European Central Bank (ECB) policymaker Robert Holzmann supported calls for a third straight 75 basis points (bps) rate increase for the December monetary policy meeting In an interview with the Financial Times (FT). However, European Central Bank board member and Bank of Portugal Governor Mario Centeno mentioned that there are many conditions for the rates increase to be less than 75 bps.
On the other hand, Kansas City Federal Reserve President Esther George recently said, “(We) could well take a higher interest rate for some time to convince households to hold on to savings.”
It’s worth noting that an improvement in the market’s sentiment despite the looming Covid woes from China and mixed concerns surrounding the US-China ties helped the EUR/USD pair to register the first daily gain in four on Tuesday. While portraying the mood, stocks in Europe and the UK, as well as Wall Street, closed positively whereas the US 10-year Treasury yields dropped six basis points (bps) to 3.76%.
With the recently upbeat market sentiment and softer US Treasury yields, the US Dollar Index (DXY) also marked broad losses ahead of crucial catalysts scheduled for publish today. The reason could well be linked to the market’s expectations of softer rate hikes from the Federal Reserve (Fed).
Moving on, global markets may witness a volatile day as multiple central bank events and data are likely to entertain the momentum traders. Among them, the preliminary readings of November’s monthly activity data and Minutes of the Fed’s latest minutes will be closely observed to confirm the chatters surrounding the economic transition and the 50 bps rate hike chatters from the Fed. Additionally, talks surrounding the gas price cap from the Group of Seven (G7) will also be important to watch for clear directions.
Technical analysis
Despite the latest rebound the EUR/USD pair’s failure to cross the previous support line from November 04 and the 10-Day Moving Average (DMA), currently around 1.0340 and 1.0320 in the order, keeps teasing the bears.