EURUSD fell 0.40% to 1.0742, spurred by Powell’s hawkish statements and rising US Treasury yields.
The Euro (EURUSD) fell 0.40% against the US dollar in early trading during the New York session, aided by high US Treasury yields and a strong US dollar. In his Sunday interview, Federal Reserve Chair Jerome Powell offered a hawkish message to the detriment of other G10 currency pairs. At the time of writing, the EURUSD is trading at 1.0742 after hitting A high of 1.0785.
Powell underscores the Fed’s commitment to achieving its inflation objective, implying mid-year policy adjustments.
The EURUSD is under pressure as Powell reiterates his focus on inflation.
Powell stated over the weekend that it was too early to loosen policy, noting that the goal of pushing inflation toward its 2% target was far from complete. The Fed Chair noted that the first cut might occur in the middle of the year.
The US labor market resilience in January bolsters the USD, in contrast to the Eurozone’s economic weakness.
Meanwhile, figures released last week surprised the US economy, as the January Nonfarm Payrolls report showed that the labor market added 353K Americans to the workforce while the unemployment rate remained at 3.7%. This suggests that the labor market is still healthy, which supports the soft-landing scenario.
US Treasury yields jumped substantially following the Fed’s Chair Powell interview, while the US Dollar Index (DXY), a gauge of The dollar index increased 0.41% to 104.39.
The euro falls as the US dollar index rises, with ECB policy lowering expectations and a focus on central bank measures.
The Euro fell as Flash PMIs in the Eurozone (EU) remained in recessionary territory, despite signs that the economy had marginally recovered. Furthermore, the block’s Producer Price Index (PPI) fell somewhat. Given the backdrop of the EU’s disinflation process, the European Central Bank (ECB) may begin to loosen policy.
EURUSD Technical Outlook
The EURUSD has gone below the 100-day moving average (DMA) of 1.0783, reaching a new year-to-date (YTD) low of 1.0725, which is on track to surpass the low of 1.0723 set on December 8.
A breach of the latter will pave the way to 1.0700. On the opposite side, buyers may Recover some ground beyond the 1.0750, followed by the 100-DMA and the 1.0800 figure.
