EURUSD pair comes under some selling pressure.
On Wednesday, the EURUSD pair comes under some selling pressure. And moves farther away from a three-week high, around the 1.0825 level. Achieved the previous day. Spot prices are again on the defensive moving into the European session. Trading at 1.0780-1.0775, down almost 0.15% on the day.
The safe-haven Greenback benefits from higher US bond yields and a milder risk tone.
A generally softer tone in US equities futures drives some haven flows to the US Dollar (USD). Which is viewed as a key factor pulling the EURUSD pair down. Any significant USD rebound, from its lowest level since May 17 established. On Tuesday, remains elusive in the wake of growing expectations that the Federal Reserve (Fed) will refrain from raising interest rates. At the conclusion of a two-day policy meeting later today.
Market expectations for a break in the Fed’s year-long policy tightening cycle were reinforced. On Tuesday by lower US consumer inflation numbers. In fact, the headline CPI climbed little in May. Although the annual rate slowed to the smallest since March 2021. Nonetheless, the year-on-year inflation rate of 4.0% is above the Fed’s 2% target. keeping prospects alive for an additional 25 basis point lift-off at the July FOMC meeting.
As a result, elevated US Treasury bond yields remain beneficial. Along with some repositioning trading. Ahead of the big central bank event risk, the Greenback is seen as receiving some support. Nonetheless, recent hawkish statements by a bevy of key European Central Bank (ECB) officials show that, despite a drop in the headline Eurozone CPI to 6.1% in May, there is still room to boost borrowing costs.
It’s worth noting that ECB President Christine Lagarde said last week that more interest rate hikes were anticipated because there was no clear evidence that underlying inflation had peaked. This might strengthen the common currency and help the EURUSD pair. Traders may also want to stay on the sidelines ahead of the big central bank event risks – the Fed’s rate hike.
