Oct 17 (Reuters) – EUR/USD rallied on Tuesday, fighting back after a brief drop on surprisingly robust U.S. retail sales, as bulls appeared unwilling to relinquish control until U.S. claims data and remarks from Fed Chair Jerome Powell in the upcoming session.
The sales data drove sharp gains in Treasury yields US2YT=RRUS10YT=RR and increased the dollar’s yield advantage over euro US2DE2=RRUS10DE10=RR but lack of follow through allowed EUR/USD to recover and then rally to a three-session high.
Curbing investors’ dollar enthusiasm, recent Fed rhetoric has bolstered expectations that the U.S. central bank will hold rates steady in November and December, consistent with pricing in the CME’s FedWatch Tool https://tinyurl.com/yfj43vd9.
U.S. weekly claims data may give reason for the Fed to hold rates steady if the reports echo WARN data– a notice of plant closings and mass layoffs- indicating weakness in the jobs market.
Investors are also awaiting remarks from Powell to see if he reinforces the steady-rate rhetoric of some of his colleagues. Any hints that the rate hiking cycle is done could weaken U.S. rates SRAH24, and the dollar along with them.
EUR/USD could then rally through 1.0640/70 resistance, trigger stop buying and squeeze shorts, potentially driving gains toward the 200-DMA and 1.0825/50.
For more click on FXBUZ
eurusd https://tmsnrt.rs/3Fjd8uj
deus https://tmsnrt.rs/48WBlUz
sofr https://tmsnrt.rs/3Q1e1MN
(Christopher Romano is a Reuters market analyst. The views expressed are his own)
(([email protected];))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
