EUR/USD skates on thin ice below 0.9800 amid lackluster yields, eyes on Fed speakers

  • EUR/USD resumes offers to cut intraday losses, braces for first of three weekly gains.
  • Yields are hovering around multi-year highs as markets wait for new clues.
  • Fedspeak’s last round before the pre-FOMC blackout will be crucial as DXY struggles despite hawkish bets on the Fed.
  • Preliminary Eurozone consumer confidence for October will also be important.

EUR/USD is posting slight intraday losses around 0.9780 despite the recent rebound from the day’s low, which in turn depicts market indecision amid a light calendar day on Friday. Even so, the major currency is bracing for the first in three weekly gains as the US Dollar Index (DXY) struggles to justify high Treasury yields and hawkish Fed bets.

DXY is showing a three-day bullish trend as it hits 113.00 at press time, up 0.12% intraday. Even so, the greenback gauge is recording a two-week uptrend while posting a weekly loss of 0.30% at press time.

That said, the greenback’s weekly loss could be tied to Monday’s sharp drop, while the latest rally takes inspiration from US and Fedspeak data.

Initial jobless claims in the United States fell to 214,000 for the week ended October 07 against 230,000 expected and a downward revision of 226,000 previously. Additionally, the Philadelphia Fed’s Manufacturing Survey Index fell to -8.7 for October versus the market consensus of -5 and the previous reading of -9.9. Additionally, sales of existing homes in the United States exceeded the 4.7 million expected at 4.71 million, but fell below 4.78 million previously. Recently, Federal Reserve Governor Lisa Cook mentioned that continued rate increases will be needed.

Amid those games, 10-year US Treasury bond yields hit a 14-year high the day before, around 4.22% at press time. Additionally, two-year US Treasury yields hit the highest levels since 2007 before recently hitting 4.62%. It should be noted that Wall Street closed in the red after an initially bullish performance while S&P 500 futures extended yesterday’s losses with an intraday decline of 0.50% at the latest.

Along with the rally in the US Dollar, fears of an escalation in the energy crisis in the bloc are also putting downward pressure on the EUR/USD. During the ongoing EU summit, Germany is dropping its opposition to the bloc’s natural gas price cap and, as a result, Moscow may soon convey its dislike.

Given the aforementioned details, EUR/USD should remain risky, but the final dose of comments from Fed speakers ahead of the blackout period ahead of November’s Federal Open Market Committee (FOMC) meeting will be crucial for guidance. clear from the market. It will also be important to watch the preliminary Eurozone consumer confidence reading for October, expected at -30.00 vs. -28.8 previously.

Technical analysis

50-SMA joins an ascending trend line from September 28 to limit EUR/USD’s immediate decline around the support at 0.9760, a break of which could quickly lead the quote to a horizontal zone comprising multiple lows marked since September 23, near 0.9680-70 .

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