EURUSD Outlook, USD weakness, or Stronger Euro?

EURUSD Outlook, USD weakness, or Stronger Euro?
Analysis
Ahura Chalki
Author:
Ahura Chalki
Published on: 24.08.2021 19:10 (UTC)
Post reading time: 1.76 min
115

EURUSD increasing for the 3rd day in a row


As market risk decreasing, USD also losing its safe-haven demand position. So pairing started its recovery from 9 months low that seen on Friday at 1.1662 since the beginning of this week. 


When we look at the chart and data, we can easily understand that the key market driver for pairing is the US dollar. US dollar index falls rapidly this week from Friday`s 9-months high (93.72) to 92.80, seen earlier today. 


And US dollar market drivers are nothing more than Risk sentiment and economic data, and none of them moving in the favor of this great index. As we can see, US 10-years Bond`s yields increasing in the past three days as well, towards 1.30%, at its weekly high. As it`s known, the higher bond yields mean lower market risk, which now means less demand for the US Dollar, because money flows towards risky markets. 


On the other hand, the published data from the US also could not support the country`s currency as Retail sales and Purchasing Managers Indexes, all missed the expectations. However, we should not forget about Housing data. Both existing and new house sales increase in July. Even though if positive housing data was ignored by a market participant, however, it can be important in the next few days. 


Thursday, we will have the US GDP, and Friday, PCE, the preferred FED measure for Inflation consideration. If we can see the final numbers of Q2 GDP above the initial estimates, and inflation increase again, then investors can remember the housing numbers and the possible inflation that can cause by it. Increasing the fears about higher inflation with positive GDP numbers then will put again, the tapering of asset purchases in the spotlight, and if so, then the EURUSD scenario also can change in favor of the US dollar


From the technical side, EURUSD in the short term remains bullish, especially as long as it is trading above 1.1750. Monday close of 1.1700 also is the key support, and breaching under this level can open the doors for lower levels and increase the bearish pressure.


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