EUR/USD grinds higher towards 1.1900 amid softer USD, ECB hopes
- EUR/USD struggles to keep the rebound near multi-day top.
- US dollar ignores firmer Treasury yields amid risk-on mood.
- ECB hawks brace for Thursday, easy covid numbers add to the market’s optimism.
- Eurozone GDP revision, ZEW numbers can entertain buyers but all eyes on ECB tapering chatters.
EUR/USD pares intraday gains below 1.1900, up 0.08% on a day around 1.1880 heading into Tuesday’s European session. In doing so, the currency major pair cheers US dollar weakness while taking rounds to the multi-day top marked last Friday.
US Dollar Index (DXY) drops 0.07% intraday to 92.14 by the press time amid risk-on markets. The upbeat sentiment takes clues from easing coronavirus fears and vaccine hopes, as well as escalating chatters over the European Central Bank (ECB) tapering. Furthermore, the US traders’ return from the holiday starts the week with old tunes surrounding dismal US jobs reports and favor the positive mood.
Australia, New Zealand and Japan mark the reduction in the COVID-19 numbers and tease plans of how they could overcome the pandemic, especially in Australia. Also adding to the optimism are the talks surrounding booster shots and faster covid vaccinations.
Also, markets keep piling on the bets of the ECB’s hawkish hold this week even as French central bank chief Francois Villeroy de Galhau argues that “The first P in PEPP stands for a pandemic, not permanent, and a good reason.” On Monday, The European Union (EU) Economy Commissioner Paolo Gentiloni said, per Bloomberg, "I think it would be a big mistake because the mainstream consensus is on the fact that this inflation is still a temporary phenomenon."
The ECB is up for fueling the market moves on Thursday as not event traders but the policymakers are also divided over the bond purchase plan of the bloc’s central bank amid recently improving economics.
Read: The dollar story ahead of ECB
On the other hand, chatters surrounding the Fed’s tapering seem to have already faded after the latest disappointment from the US jobs report.
Amid these plays, the US 10-year Treasury yields begin the week’s trading on a firmer not around 1.34% whereas S&P 500 Futures rise 0.13% intraday to 4,540 at the latest.
Moving on, the second reading of the Eurozone Q2 GDP and ZEW sentiment numbers for the region, as well as for Germany, for September, may offer immediate direction to the EUR/USD prices. However, major attention will be given to how the US and Canadian traders respond to the latest market catalysts.
Technical analysis
Firmer oscillators back EUR/USD bulls inside a two-week-old rising channel, currently between 1.1920 and 1.1860. It should be noted, however, that the double tops formed around 1.1910 become the key hurdle to cross for the pair buyers.