EUR/USD at 1.0520: Navigating Bearish Currents Amidst Rising US Treasury Yields and ECB’s Cautious Tone

The EUR/USD pair grapples with sustaining momentum from its prior rise from a week-long low at 1.0520, registering a slight decline in the Friday Asian trading window. The currency duo portrays a subdued undertone for its fourth consecutive day, though it remains poised slightly above the 1.0500 midpoint.

A subtle ascent in the US Treasury bond yields lends buoyancy to the US Dollar (USD). Coupled with the European Central Bank’s (ECB) dovish stance, this becomes a significant constraint for the upward movement of the EUR/USD . Despite the abating inflationary indicators in the US, the Federal Reserve (Fed) is poised to maintain its assertive approach, favoring prolonged elevated rates, given the enduring strength of the US economic landscape.

Recent US economic indicators have underscored this sentiment, reflecting a 4.9% annual growth in the third quarter, surpassing the anticipated 4.2%. Moreover, the US Durable Goods Orders witnessed a substantial 4.7% rise in September, exceeding market projections. These factors, along with the ECB’s cautious perspective, exert pressure on the EUR/USD .

As predicted, the ECB maintained its rate stance, concluding its remarkable tenfold consecutive hikes in borrowing rates, prompted by apprehensions surrounding the eurozone’s economic growth. In her subsequent address, ECB Chief Christine Lagarde projected tepid growth for the remainder of the fiscal year due to the sweeping effects of increased interest rates, though she didn’t dismiss potential rate enhancements.

Investors display caution in committing to strong bearish positions for the EUR/USD , especially with the impending unveiling of the US Core PCE Price Index – a pivotal inflation metric for the Fed. This data will shape market sentiments concerning the Fed’s impending rate adjustments, consequently impacting USD’s appeal and furnishing new vigor to the primary currency pair. However, current trajectories suggest a slight weekly depreciation for the pair.

EUR/USD Technical Analysis:

The EUR/USD has experienced a pivotal breach below its bullish channel’s support and consolidates further, accentuating the prospect of a bearish trend persisting throughout the day. It’s pertinent to note that our outlook targets a descent towards the 1.0448 mark.

The 50-day Exponential Moving Average (EMA50) exerts a downward thrust, bolstering the anticipated bearish movement. This trajectory hinges on the currency pair’s ability to remain below the 1.0585 mark.

Today’s anticipated trading spectrum spans from a support at 1.0460 to resistance at 1.0600.