Home Forex EUR/USD rebounds near 0.9960, downside looks likely on hawkish Fed bets

EUR/USD rebounds near 0.9960, downside looks likely on hawkish Fed bets

by SuperiorInvest
  • EUR/USD showed a short-term decline around 0.9960, further weakening is imminent.
  • A rising core CPI index indicates an outright rise in prices of durable goods.
  • Eurozone bulls weakened on growing pessimism in the trading bloc.

The EUR/USD the pair picked up bids around 0.9960 in the Asian session after falling sharply from highs around 1.0180. The asset witnessed an intense sell-off after giving up the critical 1.0100 support following the release of surprisingly higher-than-expected US inflation data. In the Asian session, bulls in the shared currency attempted a rebound but it seems short-lived and will soon return to the downward path towards the 19-year low at 0.9864.

Rebound in the US Consumer Price Index (CPI) renewed chances for a third 75 basis point (bps) rate hike in a row by the Federal Reserve (Fed). Fed policymakers’ long-running efforts to cool red-hot inflation appear to have been futile. The decline in headline CPI since the previous release is a result of falling gasoline prices.

While the consumer durables price growth index escalated as the core CPI, which excludes food and oil prices rose to 6.3% versus forecasts of 6.1% and the previous release of 5.9%. This will trouble households as their labor cost index data remained below average.

Meantime, eurozone bulls weakened due to decline in ZEW Survey- Economic Sentiment. Economic data fell sharply to -60.7 versus expectations of -52 and the previous release of -54.9. A decline in institutional investor confidence in the economy suggests that retail demand and investment from corporate and foreign investors are expected to decline significantly.

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