EURUSD has retreated after hitting resistance at 1.0700, despite the USD Index’s rebound.
After encountering solid resistance around 1.0700 in the early European session, the EURUSD pair has seen some selling interest. The main currency pair has been steadily defending the critical support level of 1.0670, therefore a breach of that level would result in larger negative ticks. The Euro is under pressure as investors anticipate a grim economic picture for the Eurozone.
The S&P500 futures gained little in the Asian session. On Tuesday, US shares closed higher after additional dovish comments. The Federal Reserve’s (Fed) interest rate policy filters are being augmented by triggers. The US Dollar Index (DXY) has risen to around 104.18. On a larger level, the USD Index is under pressure due to a paucity of economic developments this week.
Demand for US government bonds has increased, despite a slight decrease in hawkish Fed bets. According to the CME Fed Watch tool, more than 80% of the odds favor a stable interest rate policy. As a result, 10-year US Treasury rates have fallen to around 3.66%.
Given the continuance of core inflation, ECB Lagarde is likely to boost interest rates further.
In the Eurozone, the German economy is suffering as a result of the European Central Bank’s (ECB) increased interest rates. The German economy has already entered a slump after a quarterly drop in Gross Domestic Product (GDP). Furthermore, German factory orders have been constantly decreasing, indicating sluggish demand.
Aside from that, Eurozone Retail Sales data released on Tuesday fell short of forecasts. Monthly retail sales were flat, against expectations for a 0.2% increase. Annual retail sales fell 2.6%, falling short of the -1.8% predicted. Despite the bleak economic prognosis, ECB President Christine Lagarde is quite likely to hike interest rates further, given the continuance of core inflation.
