EURUSD enjoys significant upward traction and takes support from a variety of reasons.
On Thursday, the EURUSD pair attracted some purchasing. Halting this week’s retracement decline from the 1.0965 zone, or its highest level since August 11. Following the release of the flash German PMI prints. Buying interest heats up and spot prices reach a new daily high in the 1.0930 range during the early portion of the European session.
The preliminary report on business activity According to the HCOB poll. The downturn in Germany’s industrial and services sectors lessened slightly in November. This, in turn, enhances optimism that the recession in the Eurozone’s largest economy would be milder than expected, boosting the common currency.
Fed rate cut bets reduce US bond yields, prompting additional selling around the USD.
Aside from that, the development of new US Dollar (USD) selling. Driven by dovish Federal Reserve (Fed) expectations, appears to be another reason driving the EURUSD pair higher.
The USD Index (DXY), which measures the value of the US dollar. Against a basket of currencies, is struggling to capitalize on its recent recovery from the lowest level since August 31st. Which was reached on Tuesday. As a result of wagers that the Fed is done hiking interest rates. Instead, current market pricing shows. That there is a larger than 50% possibility. That the Fed will lower interest rates by May 2024. This is bolstered by a new decline in US Treasury bond yields. Which puts downward pressure on the dollar and supports the EURUSD pair.
The aforementioned underlying backdrop, together with ECB President Christine Lagarde’s hawkish remarks earlier this week, increases prospects for a further near-term appreciation in spot prices. Lagarde stated at a Berlin event that it is too early to declare victory over inflation and that bets based on short-term data flow are premature. This leads markets to lower their expectations for the ECB’s next move, which is expected to be a rate cut.
It will be fascinating to watch if the EURUSD pair can recover. capitalize on the bullish trend or whether bulls hesitate from putting new bets in the aftermath of relatively light trading volumes on Thursday due to the US Thanksgiving holiday. Nonetheless, spot prices appear to have broken a two-day losing run and are still at the mercy of USD price dynamics.
