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EURUSD entices sellers below 1.0400 with an eye on Lagarde's ECB speech
After reversing a two-day rise the previous day, the EURUSD lacks a distinct direction. Market sluggishness hinders EURUSD advances, while yield strength and DXY's comeback keep sellers optimistic. Weaker Eurozone inflation readings and risk-averse drivers exert downward pressure on pricing. ECB President Lagarde must defend aggressive policy and demonstrate positivity to repel EURUSD bearish.
After posting its first daily loss in three sessions, the EURUSD lacks direction around 1.0365 on Friday morning. In doing so, the main currency pair cuts its weekly gains amid a lackluster session preceding Christine Lagarde's address as president of the European Central Bank (ECB).
Lately, the EURUSD bears appeared to be under pressure from the US Dollar's inability to justify the comeback in US Treasury yields from the six-week low. The cautious optimism around US President Joe Biden's attempt to soften on student loans and the most recent survey on the Fed's future move may also pose a threat to pair sellers.
CNBC reported that the Biden administration will petition the Supreme Court to reinstate the student loan debt relief program. On the other hand, October's disappointing Philadelphia Fed Manufacturing Index and housing data may have cast doubt on the Fed's recent hawkish rhetoric.
In addition, according to the most recent Reuters poll for the US Federal Reserve (Fed), the Fed will downshift in December to deliver a 50 basis point (bps) interest rate hike, but a longer period of US central bank tightening and a higher policy rate peak are the greatest risks to the current outlook.
However, aggressive Fed language and weaker Eurozone data might be cited as the pair's most recent obstacles. James Bullard, president of the Federal Reserve Bank of St. Louis, stated on Thursday that the US Federal Reserve's (Fed) monetary policy is not currently considered to be sufficiently restrictive to cut inflation. Neel Kashkari, president of the Minneapolis Federal Reserve Bank, stated along the similar lines: "With inflation remaining high and a significant amount of monetary policy tightening already in the works, it is uncertain how high the US central bank will need to hike its policy rate."
Notably, a downward revision to Eurozone inflation statistics, as measured by the Harmonized Index of Consumer Prices (HICP), to 10.6% (final) in October from 9.9% in September versus initial predictions of 10.7% also favored EURUSD bears the day before.
The benchmark US 10-year Treasury yields rebounded from a six-week low before remaining largely constant at 3.77 percent, whilst the S&P 500 Futures remain undecided as of press time.
As the pair loses positive momentum, a statement by ECB President Lagarde will be essential for near-term EURUSD price action. However, hawkish remarks from Lagarde and lower US Existing Home Sales figures for October will not hesitate to keep bulls on the table.
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