EUR/USD remains poised to extend losses below 1.1600 amid USD rebound
- EUR/USD reverses the initial gains on Tuesday in the Asian trading hours.
- US Dollar Index trades at 93.90 following an uptick in the US T-bond yields.
- US-China optimism, pre-major central banks volatility supports the greenback.
EUR/USD remains subdued in the Asian session on Tuesday. The pair continued to move in a narrow trade band of 1.1600 and 1.1670 for the past week. At the time of writing, EUR/USD is trading at 1.1599, down 0.06% for the day.
The greenback trades near 94.00, tracking higher US 10-year benchmark Treasury yields. Investors cheered the positive talks between China’s Vice Premier Liu He and US Treasury Secretary Janet Yellen, as they discussed bilateral relations and macroeconomic situation. In addition to that, Investors are bracing up for Fed’s tapering and a delayed rate hike expectation.
The shared currency remained under pressure owing to a number of factors. The European Central Bank (ECB) Governor Council member and Spanish central bank chief Pablo Hernandez de Cos remained concerned about the economic recovery pace due to supply-chain issues and rising raw material prices.
In addition to that, the German October IFO Survey suggested that the Business Climate contracted by more than anticipated to 97.7. Also, the Bundesbank monthly report showed that the full-year growth in 2021 was likely to be significantly lower than the June forecast of 3.7%.
Furthermore, the five-year forward inflation swap, a key market gauge of Eurozone inflation, jumped 10-basis points to 2.0528%, the highest since 2014 and above the ECB’s inflation target of 2%. Traders assessed the reading could alter the current dovish EBC’s stance in the monetary policy meeting due on Thursday.
As for now, traders are waiting for the ECB Bank Lending Survey, German Gfk Consumer Confidence, US Housing Price Index, and Consumer Confidence to take fresh trading impetus.
EUR/USD additional levels