Market news
23.11.2021, 05:09

EUR/USD teases 2021 low above 1.1200 on higher yields, PMIs eyed

  • EUR/USD retreats towards multi-day low following two-day downtrend.
  • DXY tracks firmer yields as Biden’s nomination for Fed officials propel rate hike woes.
  • Eurozone covid woes, ECB officials’ comments add to bearish bias.
  • November’s PMI for Germany, Eurozone precede US activity numbers to direct immediate moves.

EUR/USD remains pressured around the yearly low near 1.1230, recently easing ahead of Tuesday’s European session. The currency major pair dropped during the last two consecutive days to refresh the 16-month low as firmer US Treasury yields underpinned the US Dollar Index (DXY) strength.

US 10-year bond coupon jumped the most in a week the previous day as US President Joe Biden nominates Jerome Powell for another term as the Federal Reserve (Fed) Chair while also proposing Richard Clarida’s name for Vice-Chairman’s post. Given the recently hawkish expectations from Powell, Biden’s nomination propelled the Fed rate hike call and enabled the Treasury yields to reverse the previous week’s loss in a single before hovering in Asia amid Japan’s off.

Atlanta Federal Reserve President Raphael Bostic and US Treasury Secretary Janet Yellen praised Biden's decision while flashing mixed signals over the Fed's next moves and inflation. However, they both failed to impress markets with an absence of new comments. While Fed’s Bostic highlighted faster taper and covid economy, Yellen mentioned during the Bloomberg interview that price pressures subside as life normalizes in 2022.

Also exerting downside pressure on the EUR/USD are the recently escalating COVID-19 woes in the bloc. “Austria became on Monday the first country in western Europe to reimpose lockdown since vaccines were rolled out, shutting non-essential shops, bars and cafes as surging caseloads raised the specter of a second straight winter in deep freeze for the continent,” said Reuters. The news also quotes the outgoing German Chancellor Angela Merkel as saying, “We are in a highly dramatic situation. What is in place now is not sufficient.”

Furthermore, the European Central Bank (ECB) policymakers’ dovish comments and the market’s firmer belief that the Fed will precede the regional central bank as far as the rate hike is concerned also weigh on the EUR/USD prices. Recently, ECB’s Governing Council members, namely Martins Kazaks and François Villeroy de Galhau flashed mixed signals over ending the Pandemic Emergency Purchase Programme (PEPP).

Amid these plays, the US 10-year Treasury yields hover around 1.627% whereas stock futures in the US and Europe remain lackluster at the latest. Further, the US Dollar Index (DXY) seesaw around a 16-week high flashed earlier in Asia.

Moving on, likely easy PMI figures from Germany and Eurozone may help the EUR/USD bears to keep reins ahead of the key US PMI data. Should Markit PMI numbers confirm inflation fears via activity numbers, the major pair will have a further downside to track.

Technical analysis

While oversold RSI conditions hint at a corrective pullback towards a two-week-old resistance line near 1.1320, EUR/USD will be vulnerable to test June 2020 low near 1.1170 on the downside break of the 1.1200 threshold.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location