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Jun 23 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Slips As PMIs Highlight Worries About Global Growth

By Paul Spirgel  —  Jun 23 - 02:15 PM

The dollar index rose on Thursday, recovering from weakness in the wake of below-forecast U.S. PMI data while Fed Chair Jerome Powell reiterated his determination to bring soaring inflation down to earth.

Powell said recession is not inevitable and that he expects inflation to fall closer to the Fed’s 2% goal over the next two years.

In the broader global macro space, weak PMIs added to the inflation-related global recession narrative amid China’s COVID curbs and the Russia-Ukraine conflict.

Barclays added its voice to the chorus of forecasters expecting a global slowdown in 2023 as central banks rush to hike rates to curb inflation.

EUR/USD slipped 0.53% to above 1.05 by U.S. afternoon trade, after testing 10-DMA support by 1.0495.
EUR bulls are wary of 1.0567, the 50% Fib of the recent 1.0774-1.0359 dip.

USD/JPY fell 1% to 134.83.
Global recession fears and haven flows have caused global yields to ratchet lower narrowing Japanese spreads with other developed market bonds.

USD/JPY found support at its 10-DMA by 134.80.
Support remains well below current levels at the 21-DMA by 132.50 and the June 16 low at 131.49.

Despite Thursday’s pullback, yen gains are likely to be short-lived as most developed market central bank rate paths remain more hawkish than the steady BoJ.

GBP/USD slid 0.3% to 1.2225 in a whipsaw after dropping in sympathy with lower euro zone PMIs, then rallying after the U.S. data disappointment.
Sterling remains bid below 1.22. A close below 1.2170, the 50% Fib of the 1.1943-1.2406 June rise, would shift momentum to GBP bears.

Cryptos gained as global yields dipped.
BTC remains anchored by $20k, up 1.6% at $20.2k, while ETH rose 4.2% to $1,093.
Recent loftier gains by ETH versus BTC indicates traders may be bullish as they add to tier-2 cryptos after the sector's recent drubbing.

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Refinitiv IFR Research/Market Commentary


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