EURUSD pair gets some strength over the 1.0900.
The EURUSD pair gets some strength for the second day in a row on Tuesday. Climbing back over the 1.0900 level. Spot prices are now trading at a three-day high and hope to build. On the recent comeback from a two-month low. Which was reached last Friday in the 1.0845 zone.
EURUSD benefit from the shrinking of the German yield curve inversion.
According to Philip Lane, Chief Economist at the European Central Bank (ECB). On Friday, the Eurozone economy was expected to continue rising. And to avoid a serious or prolonged recession. This narrows the inversion of the German yield curve. And enhances expectations for additional ECB policy tightening. Which is regarded as supporting the shared currency. Aside from that, a little decline in the value of the US dollar (USD) acts as a tailwind for the EURUSD pair.
Hawkish Fed predictions may restrict the USD’s decline and hold any additional advances in check.
In fact, the USD Index (DXY), which measures the value of the US dollar against a basket of currencies, has remained below its highest level since July 12. As traders continue to bet on the Federal Reserve (Fed) pausing its rate-hiking cycle in September. Nonetheless, incoming US economic data continues to hint toan extraordinarily strong economy. And leaves the door open for another 25 basis point hike before the end of the year. Which should help avoid any further USD losses.
The expectation that the Fed would maintain interest rates higher for a longer period of time supports increased US Treasury bond yields. It’s worth noting that the yield on the benchmark 10-year US government bond hit a new 15-year high on Monday.
Aside from that, a generally softer risk tone helps the safe-haven USD stay close above a theoretically crucial 200-day SMA (USD). This might deter bulls from initiating aggressive wagers on the EURUSD pair.
Traders may also want to remain on the sidelines in anticipation of the Jackson Hole Symposium.
EURUSD investors may also opt to stay on the sidelines ahead of Fed Chair Jerome Powell’s speech. The lecture by ECB President Christine Lagarde at the Jackson Hole Symposium later this week. Investors will also take cues from the flash version of the Eurozone and US PMI prints, which are coming on Wednesday and will give new insights into the economic health and whether the respective central banks can afford to raise interest rates further.
Meanwhile, traders will draw cues from the publication of Eurozone Current Account numbers on Tuesday, which will be followed by Existing Home Sales and the Richmond Manufacturing Index from the US later in the early North American session. This, together with US bond rates and overall risk sentiment, may affect USD price dynamics and generate short-term trading opportunities around the EURUSD.