EUR/USD bulls again aim for 1.1280 as US Dollar weakness supersede Eurozone economic concerns
EUR/USD prints the first daily gains in three, grinds near intraday high of late. US Dollar retreats amid mixed markets, braces for next week’s FOMC. Talks about easing Eurozone inflation, downbeat employment prod Euro bulls. Preliminary readings of EU Consumer Confidence for July, mid-tier US employment, housing clues eyed for intraday directions.
EUR/USD clings to mild gains around 1.1220 as it prints the first daily profits in three heading into Thursday’s European session. In doing so, the Euro pair cheers the broad US Dollar weakness while paying little heed to the mixed concerns about Eurozone.
That said, Reuters’ analysis highlights the multi-year high inflation and Ukrainian war to mark the grim employment conditions in the bloc and prod the optimism surrounding the Eurozone. On the same line, European Central Bank (ECB) Governing Council member Yannis Stournaras told CGTN Europe on Wednesday that he wasn't sure whether the ECB would hike rates again after 25 bps increase next week. The policymaker also argued that the inflation is falling adding that further increases of interest rates might damage the economy.
It’s worth mentioning that the economic transition in the US attracts more doubts than those from the Eurozone, which in turn keeps the EUR/USD firmer, especially when the Fed bets suggest a policy pivot after July while ECB talks are slightly less dovish.
On the contrary, US Dollar Index (DXY) drops 0.25% intraday to retest the 100.00 round figure while snapping a two-day rebound from the lowest level since April 2022. With this, the greenback justifies the previous day’s downbeat US housing data and mixed concerns about the Fed, as well as ignores the optimism at the US banks.
It should be noted that the fresh fears of the US-China tussles, emanating from the comments of China diplomat and the US House of Representatives' move concerning outbound investments and AI chips, seem to prod the EUR/USD bulls of late.
Amid these plays, the S&P500 Futures print mild losses whereas the US Treasury bond yields trade mixed at the weekly low.
Looking ahead, the preliminary readings for Eurozone’s Consumer Confidence for July will precede the US Initial Jobless Claims and Existing Home Sales to decorate the economic calendar. However, major attention should be given to the risk catalysts for clear directions. Should the scheduled EU readings come in firmer, the EUR/USD may cross the key 1.1280 hurdle amid broad US Dollar weakness while the otherwise case may not lure the bears unless the US data and sentiment propel the greenback.
Technical analysis
EUR/USD pair’s successful trading above the 1.1145-40 support confluence comprising the 10-DMA and previous resistance line stretched from February enables the Euro pair to once again target the 1.1280 resistance zone including levels marked during early 2022. However, the nearly overbought RSI conditions challenge the major currency pair’s upside past 1.1280.