EUR/USD Grasps Some Air, Ready To Dive Under 1.17 For Multiple Reasons

  • EUR/USD has been able to recover as the dollar takes a breather from gains. 
  • Biden’s speech, US data and Europe’s virus issues are set to push the pair down.
  • Wednesday’s four-hour chart is pointing to further losses for the currency pair.

Europe, Pay, Usa, Banknote, Business

One step up, now two steps down? Forex trading is never a one-way street and every trend includes setbacks – and EUR/USD’s recent bounce from 1.17 may be one of those, ahead of a downtrend (FXE, UUP).

US ten-year yields (SPTL) have retreated from their new cycle highs of 1.77% toward 1.70%, allowing the dollar to edge down from its highs. Some bargain-seekers have piled into Treasuries ahead of President Joe Biden’s critical speech. The Commander in Chief is set to present a massive infrastructure plan, which includes green investment and perhaps expenditure in “human infrastructure” in addition to roads and bridges.

The roughly $2 trillion plan is set to run for around eight years and may include tax hikes that would last even longer. It is unclear if Biden will aim for one large package or postpone part of the spending and also the tax hikes to a second phase. If the US funds its new spending only by issuing more debt, Treasuries may suffer a sell-off and the resulting higher yields would boost the dollar.

In any case, the greenback has other reasons to rise. The Conference Board’s Consumer Confidence gauge jumped to 109.7, far exceeding estimates. Americans seem content with improving prospects, especially after receiving stimulus checks as part of Biden’s covid relief program.

ADP’s private-sector jobs report is due out ahead of the president’s speech and is forecast to show an increase of over half a million positions. The payroll firm’s statistics are not well-correlated with the official Nonfarm Payrolls report but tend to move markets. Any beat would lift the dollar.

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Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk ...

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