- The US dollar is under pressure for the second day in a row.
- Wall Street pulls away from lows, Treasuries erase losses and DXY falls 0.50%.
- EUR/USD eyeing 0.9800, technicals favor gains.
The EUR/USD It is trading at the highest level since last Wednesday, slightly below 0.9800. It is up more than 250 points from Wednesday’s low as it continues to recover on the back of US dollar weakness.
The dollar is suffering as Wall Street pulls away from lows and also as US yields approach daily lows. Another negative for the dollar is the recovery of the Chinese yuan, which is having the best day in months, with the USD/CNH below 7.10.
Everybody says it’s going down, but it’s going up
Despite most current forecasts projecting EUR/USD to move south over the next several weeks to fresh multi-year lows, the pair is rising for the second day in a row on Thursday, racking up a gain of over 200 points. The impact of the surprise announced on Wednesday by the Bank of England (temporary purchase of long-term gilts at whatever scale is necessary) is still being digested by market participants.
The dollar received a brief and short-lived relief early on Thursday after the release of US economic data, which confirmed a 0.6% contraction in GDP during the second quarter and a larger-than-expected decline in initial claims. of unemployment benefit to the lowest level in months, below 200,000.
Fed officials continue to point to more rate hikes. Bullard argued that rates are likely to remain at higher levels for a longer period of time. Mester said that inflation remains the main economic problem. The US central bank is expected to continue raising rates, with the odds favoring a 75 basis point rate hike in November.
The European Central Bank is also expected to continue raising rates as inflation remains at a decade high. According to preliminary data published on Thursday, the Consumer Price Index in Germany reached 10% in September, the first time in 70 years that it has reached double digits.
Short-term technical indicators favor gains. More gains seem likely while above 0.9750. The positive tone would be affected by a retracement below 0.9640 (20 SMA in 4-hour charts). To the upside, the next resistance is the 0.9800/05 area, followed by a stronger barrier around 0.9880.
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
