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Jan 26 - 03:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Slides To Support On US Data As Fed And ECB Loom

By Randolph Donney  —  Jan 26 - 01:35 PM

The dollar rebounded on Thursday after U.S. GDP, durable goods and jobless claims reports beat forecasts, though with some underlying weakness nL1N34A2HV that could limit its gains ahead of more U.S. economic reports on Friday and next week's Fed, ECB and BoE meetings nL1N34B1PB.

EUR/USD fell 0.35% from its early 1.09295 marginal new uptrend high still shy of the 50% Fibo of the pandemic downtrend at 1.0939.
Failure to clear that hurdle likely induced some long profit-taking.

The sell-off held exactly at the rising 200-hour moving average at 1.0850 that's attracted dip-buyers over the last week.
A close below the analogous 10-DMA at 1.0846 would open the door to a bigger pullback if Friday's U.S. core PCE underpins the dollar and Fed hawks.

Treasury yield gains were trimmed after Thursday's 7-year auction.

There's been little change in the market's pricing in of slightly more than 50bp of additional Fed hikes and 140bp of ECB hikes this year, to be followed by Fed-led rate cuts.

USD/JPY rose 0.45% on rising Treasury yields versus JGB yields from the 10-year tenor in holding below the BoJ's 50bp cap.

Prices rebounded in Asian trading from near Monday's 129.05 low and past Wednesday's high, but would need to close above the falling 30-DMA and post-BoJ meeting high at 131.53/58 to signal the potential for a bigger correction of the downtrend from October's 32-year peak.

Sterling fell 0.04%, and remains close to December and January peaks by the 61.8% Fibo of the pandemic plunge near 1.2450.
The pound seems to remain unbowed by a steady stream of downcast UK data, as the BoE's relatively high rates compared to the ECB and BoJ provide support.

Friday features December core PCE, the Fed's main inflation gauge.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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