EURUSD lost further ground in the afternoon European session on Monday, as the market responded to dovish comments by Banque de France President François Villeroy de Galhau and Bundesbank President Dr. Joachim Nagel. The pair traded at 1.0925 at 13.32 GMT, marginally below three-month highs, as the market anticipates the release of US inflation data.
The US dollar has been under downward pressure from the higher-than-expected February US unemployment. While Nonfarm Payrolls rose by 275k to beat the forecast 175k, the dollar was weighed down by unemployment which beat the 3.7% figure to come in at 3.9%. Nonetheless, the dollar has received support from dovish comments by heads of the Eurozone’s top central central bankers.
The Eurozone economy showed significant signs of improvements in February, and this might have prompted comments by ECB’s top policymakers. Specifically, the policymakers stated on Friday that the Eurozone economy has achieved stability and should see an interest rate cut in spring. That means an almost concurrent timing of interest rate decision in the EU and the US around June. Notably the comments have erased the strengths gained by the EURUSD after last week’s decision by the ECB to retain the current high interest rates.
Attention now shifts to the US Consumer Price Index (CPI) reading for February on Wednesday. In the meantime, the low-yielding US treasuries could provide some tailwinds for EURUSD. The yields are stuck at 4.0%, limiting the dollar’s advances.
EURUSD has its pivot at 1.0960, and the pair’s RSI momentum currently signals control by the bears. This will likely put them on course to break the 1.0900 support and in contention to test 1.0870. However, action by the pair above the pivot, will favour bullish control. Extended control at that point by the buyers will see them attempt breaking the 1.0980 resistance, which could provide the momentum to retest the 1.1000 psychological resistance.
This post was last modified on Mar 11, 2024, 15:52 GMT 15:52