EUR/USD bears attack 1.0700 as hawkish Fed bets propel yields ahead of ECB’s Lagarde, US data

EUR/USD bears attack 1.0700 as hawkish Fed bets propel yields ahead of ECB’s Lagarde, US data

  • EUR/USD prints the first daily loss in three, holds lower ground of late.
  • Fed Officials ignore sticky inflation to defend rate hike bias, underpin yields and US Dollar rebound.
  • ECB talks appear less lucrative and so do the Eurozone statistics.
  • Dovish bias of ECB’s Lagarde, upbeat US Retail Sales, Industrial Production needed to extend latest weakness.

EUR/USD slips to 1.0715 as it prints the first daily loss in three during early Wednesday morning in Europe. The Euro pair’s latest losses could be linked to the US Dollar’s broad gains, backed by the risk-off mood and the firmer Treasury bond yields, ahead of the key catalysts scheduled to release from the Eurozone and the US.

It should be noted that the market’s sour sentiment seems taking clues from the hopes of aggressive monetary policies at the key central banks, including the Federal Reserve (Fed), Bank of England (BoE) and the European Central Bank (ECB). Adding strength to the mildly offbeat sentiment are the jitters surrounding the US-China ties amid alleged spying via balloons. While portraying the mood, S&P 500 Futures trace Wall Street’s downbeat closing to highlight the mildly offbeat mood.

Elsewhere, US 10-year Treasury bond yields retreat to around 3.74%, after rising three basis points (bps) to refresh a six-week high the previous day whereas the two-year counterpart jumped to the highest level since early November 2022 by poking 4.62%, near 4.61% at the latest.

The return of the US Treasury bond sellers appears linked to the hawkish Fed talks, as well as the better-than-forecast US Consumer Price Index (CPI) for January, which in turn joined downbeat sentiment to favor the US Dollar Index (DXY).

On the other hand, unimpressive prints of the Eurozone growth numbers joined mixed statements from ECB Officials to weigh on the Euro amid a sluggish trading session ahead of the key data.

Looking ahead, Industrial Production details for the Eurozone and the US will join the US Retail Sales, as well as NY Empire State Manufacturing Index, to decorate the calendar and offer additional clues to the EUR/USD pair traders. However, major attention will be given to ECB President Christine Lagarde’s speech as major of the latest policymakers, including Governing Council members Gabriel Makhlouf and Mario Centeno, appeared hawkish but couldn’t ignore economic fears and remained unimpressive to the Euro bulls.

Technical analysis

EUR/USD remains inside a one-week-long megaphone chart formation, a trend-widening pattern between 1.0810 and 1.0655.

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