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EUR/USD Remains Below 1.0600 In Anticipation Of Eurozone CPI Data
The EURUSD is presently trading near 1.0575 due to the risk-on sentiment and the weakening USD. The October ZEW Economic Sentiment Survey for the European Union and Germany exceeded expectations. September US Retail Sales increased 0.7% MoM, surpassing the 0.3% increase that was anticipated. Ahead of market participants are the Eurozone inflation and US housing data.
The EURUSD pair has been circling 1.0575 since Wednesday morning, when it declined from the 1.0600 level during the Asian trading session. As a result of the risk-on flows controlling the market, the US Dollar (USD) falls. The 10-year Treasury yield surges to 4.83% as the US Dollar Index (DXY) corrects lower to 106.20. Concurrently, US Treasury yields experience a steep increase.
The October reading of the ZEW Economic Sentiment Survey for the European Union increased by 8.9 points to 2.3 on Tuesday, exceeding market expectations. In addition, the German ZEW Survey Economic Sentiment improved from the previous reading of -11.4 to -1.1.
Christine Lagarde, president of the European Central Bank (ECB), stated that the ECB is monitoring energy prices and the Israel-Hamas conflict for inflation concerns. In the interim, Philip Lane, chief economist of the ECB, stated that high interest rates will remain in place until inflation returns to 2%; however, this may take longer than anticipated due to a number of factors.
The US Census Bureau's economic report for September indicated that retail sales increased by 0.7% month-over-month, exceeding market expectations of 0.3%. The Retail Sales Control Group increased 0.6% month-over-month, compared to 0.2% previously. The data indicate a robust trend in consumer spending. Moreover, US industrial production increased by 0.3% month-over-month, exceeding expectations. Capacity utilisation increased beyond expectations to 79.7 percent.
The dollar gained a small amount of ground in response to the positive US data, but the gain was temporary. Nonetheless, increased US Treasury yields could impede the USD's decline.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated on Tuesday that inflation has persisted for a significantly extended period of time than anticipated and remains high. Former Fed Presidents Patrick Harker of Philadelphia and Austan Goolsbee of Chicago maintained their dovish positions. By increasing borrowing costs, the central bank should not generate additional economic pressures, according to Harker. This week, traders will be more influenced by Fed officials' signals. The hawkish remarks could potentially strengthen the USD and provide the EUR/USD pair with a headwind.
With the final readings of the Eurozone Consumer Price Index (CPI) for September and Construction Output for August forthcoming later in the day, market participants will be on the lookout for these indicators. In addition, the speech of ECB President Lagarde may provide clues regarding the future course of monetary policy. Wednesday marks the publication of US Housing Starts and Building Permits, both of which are items on the US docket. These events may provide the EUR/USD pair with a distinct trajectory.
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