EUR/USD prints pre-data anxiety near 1.1030 as Eurozone GDP, US inflation clues loom
- EUR/USD remains defensive during two-day losing streak, sidelined of late.
- Hawkish ECB bias, mixed US data allow Euro bulls to remain hopeful.
- Challenges to sentiment, unimpressive EU statistics keep traders on the dicey floor.
- Q1 GDP for Eurozone and Germany can entertain traders ahead of Fed’s favorite inflation gauge, namely Core PCE Price Index.
EUR/USD clings to mild losses near 1.1020 during early Friday in Europe as it tries to keep bears on the table after welcoming them the previous day. With this, the Euro pair aptly portrays the market’s anxiety ahead of the top-tier growth numbers from the bloc, as well as the Federal Reserve’s (Fed) preferred inflation gauge.
EUR/USD eased from the 13-month high on Thursday even after softer US Gross Domestic Product (GDP) for the first quarter (Q1), not to forget mixed Eurozone sentiment numbers. The reason could be linked to the absence of commentary from the European Central Bank (ECB) and the Fed officials ahead of next week’s monetary policy meetings by these central banks. Also likely to have called the Euro sellers are the upbeat inflation signals from the GDP and the Personal Consumption Expenditure (PCE) Prices for Q1.
Further, US banking fallout fears regain momentum amid reports that the First Republic Bank (FRB) plans to sell half its loan book to fill a $100B deposit flight gap, which in turn should have teased the EUR/USD sellers even if the tech giants kept the market optimistic.
Elsewhere, the likely deadlock over the US debt ceiling talks, as most policymakers have contrasting views, also prods the optimists during the pre-data anxiety and restricts EUR/USD moves. Recently, House Speak Kevin McCarthy said, “I won't pass a clean debt-limit increase.”
On the same line is the escalation in the geopolitical fears surrounding China. Earlier in the day, China’s Envoy to Japan said, “The issue surrounding Taiwan is a red line that should not be crossed.”
Amid these plays, the S&P500 Futures remain directionless around mid-4,100s after rising the most in 1.5 months the previous day whereas the US Treasury bond yields grind higher and put a floor under the US Dollar Index (DXY).
Looking ahead, a likely improvement in the German and Eurozone GDP figures can challenge the EUR/USD sellers. However, the pair traders should wait for the US Core PCE Price Index for March, expected to ease to 4.5% YoY versus 4.6% prior, for clear directions. In a case where the Fed’s preferred inflation gauge print higher numbers, the major currency pair may decline heavily.
Technical analysis
EUR/USD pair’s retreat from an upward-sloping resistance line from early February, close to 1.1075 by the press time, keeps sellers hopeful amid sluggish oscillators. The pullback moves, however, remain elusive unless providing a daily close below a two-month-old ascending support line, near 1.0990 at the latest.