- EUR/USD is facing pressure above 1.0500 as the US dollar profits amid a strong recovery in bond yields in the US dollar.
- The Republican-controlled House passed a $4.5 trillion tax cut plan on Tuesday.
- Investors are awaiting the February spare German HICP and January U.S. PCE inflation data scheduled for Friday.
EUR/USD continues to face sales pressure above a psychological level of 1.0500 during its North American session on Wednesday. Major currency pairs fall due to a strong recovery in the US dollar (USD). The US Dollar Index (DXY), which tracks the value of greenbacks for six major currencies, recovers sharply near 106.50 after a weak opening in the 11-week low pressure system, early in the day.
Meanwhile, as investors shift their focus to the European Central Bank (ECB) policy conference next week, shared currency will be higher for other colleagues. The ECB is almost certain to cut the deposit facility fees to 25 basis points (BPS) to 2.5%. Therefore, investors will pay close attention to the ECB's monetary policy guidance. Many ECB officials have led central banks to continue to lower interest rates based on their expectations that inflation will return to its 2% target for a sustained return.
Soft Eurozone Q4 negotiation wage rate data is an important measure of wage growth and has boosted ECB dovish's bet. On Tuesday, the ECB reported that wage growth measures rose at a slower pace of 4.12%, compared to a 5.43% increase seen in the third quarter of the previous year.
However, ECB board member Isabel Schnabel criticized Dovish's bet because he believes the economic decline in the eurozone is due to “structural factors” “not to be caused by excessively high borrowing costs.” It seems to be. Her commentary showed that she did not support further policy easing. “It's no longer clear that the current 2.75% rate is holding back the eurozone economy,” Schnabel said.
Going forward, investors will focus on the Index of Consumer Price (HICP) Data for Germany's Flash Harmony in February, which will be released on Friday.
Daily Digest Market Movement: Trump's Tax Reduction Bill Gets Green Signals, EUR/USD will decrease
- The EUR/USD is declining as investors support the US dollar against the EUR. The US dollar has been exploiting a strong recovery in US bond yields, sliding down for almost a month. For 10 years, the US Treasury jumps to nearly 4.33% after recording a fresh 13-week low at about 4.28% early in the day.
- President Donald Trump's President Donald Trump assumed that a $4.5 trillion tax cut plan by the House would force traders to throw away government bonds, and lowering individual taxes would accelerate purchasing power. Such a scenario will encourage inflationary pressure and force the Federal Reserve to keep current interest rates between 4.25% and 4.50% for a long time.
- For new clues on current inflation status, investors are awaiting US Personal Consumption Expense Price Index (PCE) data for January, which will be released in January. Core PCE Inflation Data – the Fed's preferred inflation gauge excluding volatile foods and energy items – is estimated to have slowed from 2.8% in December to 2.6% year-on-year. Soft underlying inflation data considers the market's expectations that the Fed will remain in “wait” mode for a long time.
Today's US Dollar Price
The table below shows the rate of change in the US dollar (USD) against today's listed currencies. The US dollar was the strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.13% | 0.40% | 0.16% | 0.42% | 0.44% | 0.32% | |
| EUR | -0.24% | -0.10% | 0.14% | -0.08% | 0.17% | 0.19% | 0.08% | |
| GBP | -0.13% | 0.10% | 0.25% | 0.03% | 0.28% | 0.31% | 0.20% | |
| JPY | -0.40% | -0.14% | -0.25% | -0.23% | 0.04% | 0.04% | -0.06% | |
| CAD | -0.16% | 0.08% | -0.03% | 0.23% | 0.26% | 0.27% | 0.17% | |
| aud | -0.42% | -0.17% | -0.28% | -0.04% | -0.26% | 0.02% | -0.07% | |
| NZD | -0.44% | -0.19% | -0.31% | -0.04% | -0.27% | -0.02% | -0.10% | |
| CHF | -0.32% | -0.08% | -0.20% | 0.06% | -0.17% | 0.07% | 0.10% |
The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you select US dollars from the left column and move along the horizon to Japanese Yen, the rate of change shown in the box represents USD (base)/JPY (QUOTE).
Technical Analysis: EUR/USD faces pressures above 1.0500
The EUR/USD will remain in close range at around 1.0500 on Wednesday. The 50-day index moving average (EMA) continues to support major currency pairs around 1.0440.
The 14-day relative strength index (RSI) was wobble below 60.00. If RSI (14) can be maintained above that level, it will activate bullish momentum.
Looking down, 1.0285 Low on February 10th serves as the pair's main support zone. Conversely, the highest value of 1.0630 on December 6th would be an important barrier for the Eurobulls.
