Today, the EUR/USD pair is attempting to gain positive momentum for the second consecutive day during the Asian session, but with Europe’s entry into play, it experiences minor losses.
A slight decline in the yield of U.S. Treasury bonds drives the dollar away from a three-month high set last week and, in turn, is considered a tailwind for the EUR/USD pair. Also, the hawkish statement of European Central Bank President Christine Lagarde at the Jackson Hole symposium, that interest rates should remain high as long as necessary to curb high inflation, promotes increased demand for the euro.
However, presumably, after recent PMIs showed a greater-than-expected decline in business activity in the Eurozone, reviving fears of a recession, the ECB is likely to end its rate hike cycle soon. The potential for the Federal Reserve to further raise interest rates should support U.S. bond yields and limit dollar losses. This necessitates caution before buying euros in the EUR/USD pair.
It’s also worth noting that during his speech at the symposium in Jackson Hole, Federal Reserve Chairman Jerome Powell stated that inflation is still too high, and to rein in elevated prices, the central bank is ready to continue raising rates. A robust U.S. economy might compel the Fed to maintain its hawkish stance. Following Powell’s speech last week, expectations drove the yield of 10-year U.S. government bonds to their highest level since November 2007, thus favoring the U.S. dollar bulls.
Accordingly, the aforementioned fundamental backdrop suggests waiting for strong subsequent purchases before confirming that the EUR/USD pair will rise now.
The material has been provided by InstaForex Company – www.instaforex.com
Today, the EUR/USD pair is attempting to gain positive momentum for the second consecutive day during the Asian session, but with Europe’s entry into play, it experiences minor losses.
A slight decline in the yield of U.S. Treasury bonds drives the dollar away from a three-month high set last week and, in turn, is considered a tailwind for the EUR/USD pair. Also, the hawkish statement of European Central Bank President Christine Lagarde at the Jackson Hole symposium, that interest rates should remain high as long as necessary to curb high inflation, promotes increased demand for the euro.
However, presumably, after recent PMIs showed a greater-than-expected decline in business activity in the Eurozone, reviving fears of a recession, the ECB is likely to end its rate hike cycle soon. The potential for the Federal Reserve to further raise interest rates should support U.S. bond yields and limit dollar losses. This necessitates caution before buying euros in the EUR/USD pair.
It’s also worth noting that during his speech at the symposium in Jackson Hole, Federal Reserve Chairman Jerome Powell stated that inflation is still too high, and to rein in elevated prices, the central bank is ready to continue raising rates. A robust U.S. economy might compel the Fed to maintain its hawkish stance. Following Powell’s speech last week, expectations drove the yield of 10-year U.S. government bonds to their highest level since November 2007, thus favoring the U.S. dollar bulls.
Accordingly, the aforementioned fundamental backdrop suggests waiting for strong subsequent purchases before confirming that the EUR/USD pair will rise now.
The material has been provided by InstaForex Company – www.instaforex.com
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