- EUR/USD grinds near the highest levels in a fortnight after rising the most in 11 weeks.
- US Dollar Index ignores IMF’s hawkish urge to central bankers and drops heavily on disappointing Initial Jobless Claims.
- Eurozone Q1 GDP traces German growth figures to renew economic slowdown fears.
- Risk catalysts are key to watching for clear directions ahead of the Fed-ECB week.
EUR/USD bulls are in the driver’s seat while bracing for the next week’s European Central Bank (ECB) monetary policy meeting, ignoring the downbeat economic concerns for the old continent, amid broad US Dollar weakness. That said, the major currency pair seesaws around a two-week high after rising the most since early March the previous day, to 1.0780 amid Friday morning in Asia.
That said, the US Dollar Index (DXY) dropped the most in nearly two months the previous day after the weekly prints of the US Initial Jobless Claims jumped to the highest levels since October 2021.
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The same almost confirms no rate hike by the US Federal Reserve (Fed) interest rate hike in the next week’s Federal Open Market Committee (FOMC) monetary policy meeting while also cutting the market’s bets on July rate lifts and drowns the US Dollar.
On Thursday, US Initial Jobless Claims rose to 261K in the week ended on June 02 versus 235K expected and 233K prior (revised). With this, the four-week average rose to 237.25K from 229.75K previous readings. Further, the Continuing Jobless Claims dropped to 1.757M in the week ended on May 26 from 1.794M prior (revised), compared to 1.8M market forecasts. Earlier in the week, the US ISM Services PMI, S&P Global PMIs and Factory Orders also printed downbeat outcomes and pushed back the Fed hawks while weighing on the US Dollar.
On the other hand, the final version of the Eurozone Gross Domestic Product (GDP) for the first quarter (Q1) of 2023 marked a downward revision to the initial forecasts of 0.1% to -0.1% QoQ, versus 0.0% expected. Further, the yearly GDP figures also eased to 1.0% from 1.3% previous estimations and 1.2% market consensus. Additionally, the region’s final Employment Change matches initial forecasts and market expectations of 0.6% on QoQ during the said period but eased to 1.6% on YoY compared to 1.7% previous predictions.
With this, the recession fears in the bloc get a boost as Germany also reported a negative growth figure for Q1 2023, which in turn raises bars for the ECB hawks as they prepare for the next week’s monetary policy meeting.
It’s worth noting that the International Monetary Fund (IMF) on Thursday urged the US Federal Reserve and other global central banks to “stay the course” on monetary policy and remain vigilant in combating inflation, per Reuters.
Amid these plays, the US Treasury bond yields slumped while Wall Street benchmarks rose and exerted downside pressure on the greenback.
Looking forward, the Euro pair may witness a lackluster day amid an absence of major data/events, as well as due to the cautious mood ahead of the next week’s Fed and ECB monetary policy meetings, not to forget the US inflation numbers.
Technical analysis
A daily closing beyond a three-week-old descending resistance line, now immediate support near 1.0750, directs EUR/USD towards the 100-DMA hurdle of around 1.0810.
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