EUR/USD is holding up fairly well despite risk-off conditions and weak EZ data in the mid-1.0500s.The main risk event of the week will be Wednesday’s US CPI.
Fed/ECB policy divergence should keep the pair a sell on rallies, for now, many strategists think.
EUR/USD has held up surprisingly well on Monday in the face of further sharp downside in the global equity space that would typically lend support to the safe-haven US dollar plus soft Eurozone Sentix survey data for May. The pair is for now moving sideways in the mid-1.0500s, having found support earlier in the session following a brief dip under the 1.0500 mark.
Traders are citing concerns about central bank tightening, which is also reflected in further upside in US, European and global yields on Monday, as one factor weighing on risk appetite at the start of the week. Meanwhile, the familiar themes of slowing global growth amid continued global supply chain difficulties plus the disruptive impact of the Russo-Ukraine war and Chinese lockdowns are all also being cited as weighing on sentiment.
Should risk assets continue to trade on the ropes this week, then that would suggest further EUR/USD downside. The key event of the week will be US Consumer Price Inflation data out on Friday, which is expected to show the YoY pace of headline price growth easing to 8.1% in April from 8.5% in March.
Whilst this will come as a welcome decline that could give EUR/USD a short-term lift, with the headline rate of CPI still so high above the Fed’s 2.0% target, no dovish Fed policy shift is expected any time soon. Last week’s policy announcement and subsequent rhetoric suggest the Fed remains intent on getting interest rates back to neutral (around 2.5%) by the end of the year and then probably substantially above in 2023, as the bank seeks to cool demand and ease inflation.
EUR/USD pulls away from daily tops, trades below 1.0550.EUR/USD has reversed its direction after having advanced above 1.0570 earlier in the day. With safe-haven flows dominating the markets in the second half of the day, the dollar is regathering its strength and causing the pair to trade in the red below 1.0550. Wall Street’s main indexes are down between 1.1% and 2.2% after the opening bell.
GBP/USD retreats toward 1.2300, erases daily recovery gains.GBP/USD has lost its traction following a rebound to the 1.2400 area. The dollar continues to benefit from the risk-averse market environment in the American session, forcing the pair to stay on the back foot.
Gold trades deep in negative territory near $1,860.Gold stays under bearish pressure in the second half of the day on Monday and trades near $1,860, losing more than 1% on a daily basis. The benchmark 10-year US Treasury bond yield holds near 3.1% following an earlier decline, not allowing XAU/USD to rebound.
Shiba Inu price readies to rebound toward $0.000022
SHIB price is set to break its five-day losing streak as the US dollar is set to touch bottom and the Relative Strength Index (RSI) points to the end of the downturn.