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Jun 10 - 04:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Impervious To US Inflation, As ECB And Fed Stall

By Randolph Donney  —  Jun 10 - 02:55 PM

The dollar fell against most major currencies on Thursday and surrendered brief gains against the euro after above-forecast U.S. inflation nAPN06JUNQ and falling jobless claims nAQN049V85 failed to convince markets that the Fed would hasten plans to reduce monetary accommodation.

Weighing on the U.S. currency, 10-year Treasury yields lost initial gains on the data and then fell nearly 7 basis points from session highs to trade slightly below the spike low of 1.469% hit on May 7, which had been triggered by disappointing April payrolls during that session.

The dollar has failed to translate a more robust U.S. recovery into gains against the euro zone, though the U.S. currency fought to a stalemate against the euro after ECB President Christine Lagarde pledged a steady stimulus policy even as the bank raised most of its growth and inflation projections nL2N2NS0FH.

EUR/USD rebounded from near its 1.21345 lows on EBS, trading near flat in late-U.S.

The rebound was also helped by Reuters reporting that three of the 25 ECB Governing Council members had wanted to slow emergency asset purchases nF9N2KZ02F.

EUR/USD remains well within last week's 1.2104-1.22545 range, with Wednesday's 1.2118 rebound high by the 76.4% Fibo of that range.

The broader dollar index is also consolidating within its analogous 89.662-90.629 range ahead of the Fed meeting and U.S. retail sales next week.

Sterling gained 0.36%, aided by the Treasury yields slide, the accommodative ECB and ebbing of angst regarding Northern Ireland and Brexit nL2N2NR0LW, though President Emmanuel Macron slammed the door on any re-negotiation of the Brexit deal nFWN2NS0VY.

USD/JPY fell 0.18% after its fleeting post-CPI rise to 109.80.
Falling Treasury yields since the June 3 bounce on strong ADP data is smothering USD/JPY, even though some of the oddly strong demand for Treasuries is likely coming from Japanese accounts trying to improve on extremely low JGB yields.

This week's lows were all clustered by the 30-day moving average line at 109.28.
A daily range below it and the 38.2% Fibo of the April-June rise at 109.24 would undermine the choppy uptrend, with the 61.8% Fibo and May 25 swing low at 108.565 key support.

The only notable U.S. data Friday is June Michigan consumer sentiment, including its closely watched inflation expectations.

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Refinitiv IFR Research/Market Commentary


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