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Oct 29 - 11:55 AM

EUR/USD - COMMENT-US Price, Employment Cost Data Spur Fed Bets, Hit EUR/USD

By Christopher Romano  —  Oct 29 - 09:36 AM

EUR/USD fell on Friday, erasing much of the previous session's ECB-inspired gains as strong U.S. consumer spending and inflation nL1N2RO35T, coupled with a surge in employment costs nAQN051F1M, led investors to push U.S. rates and pull forward expectations for Fed hikes.

For EUR/USD, the U.S. data overshadowed above-forecast euro zone inflation nS8N2Q400Z and gains in euro zone rates FEIM2

U.S.
10-year yields US10YT=RR rallied toward 1.62% while June 2022 eurodollars EDM2 fell towards the 1-1/2-year low set Thursday, reflecting earlier betting on the first Fed rate hike.

The U.S. rate moves trumped the rally in euro zone rates DE10YT=RRFEIM2 and drove broad based US dollar buying.

EUR/USD support in the 1.1570/85 zone is back in play as the pair fell below the 10-DMA and daily RSI turned down.
Friday's price action resulted in a monthly doji candle forming, which implies investor indecision.
The bullish technical signals that emerged Thursday are now fading.

Investors will now focus on Wednesday's Fed meeting and the bank's rhetoric on rising inflation and possible hints about rate hike timing.

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Source:
Refinitiv IFR Research/Market Commentary

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