EUR/USD bulls approach 1.1250 on softer USD, sluggish yields, US ISM PMI eyed
- EUR/USD prints three-day uptrend, picks up bids towards intraday high of late.
- Market’s indecision fails to recall USD bulls Fedspeak refrains from hawkish signals.
- German inflation, Eurozone Q4 GDP couldn’t stop bulls during the biggest daily jump since August.
- Germany’s Retail Sales and final prints of Markit PMIs may entertain traders ahead of US ISM Manufacturing PMI.
EUR/USD picks up bids to refresh intraday high around 1.1240 during three-day uptrend heading into Tuesday’s European session. In doing so, the currency major pair cheers the broad US dollar weakness amid inactive markets ahead of the US ISM Manufacturing PMI for January.
The US Dollar Index (DXY) drops 0.09% intraday around 96.55 after portraying the biggest daily loss in a month. The greenback bears are likely to have benefited from the US Federal Reserve (Fed) policymaker’s hesitance in supporting the rate hike trajectory, despite conveying inflation fears. Among the key Fed speakers were Atlanta Fed President Raphael Bostic and Kansas City Fed President Esther George, not to forget Federal Reserve Bank of San Francisco President Mary Daly.
Additionally, comments from the OECD Secretary-General Mathias Cormann, suggesting the global inflation is seen receding over the next two years as central banks normalize monetary policy settings, also seem to have favored EUR/USD bulls of late.
Elsewhere, easing concerns over the Russia-Ukraine tussles, as per the latest news suggesting Moscow’s written report to the US, contrast the Reuters news that the US weighs more troops to Eastern Europe beyond 8,500 on alert, to challenge the market sentiment.
On Monday, Germany’s Harmonized Index of Consumer Prices rose past 4.7% forecast to 5.1% YoY whereas the preliminary readings of the Eurozone Q4 GDP matched 4.47% expectations with 4.6% YoY figures.
Looking forward, German Retail Sales for December, expected -0.6% YoY versus -2.9% prior, will entertain EUR/USD traders ahead of the US ISM Manufacturing PMI for January, expected 57.5 versus 58.7 prior, for immediate direction. However, major attention will be given to the Fedspeak and developments concerning Russia.
Read: ISM Manufacturing PMI January Preview: Fed policy counts on a continuing US expansion
Technical analysis
EUR/USD bulls extend an upside break of a two-week-old descending trend line, around 1.1220 by the press time, to aim for the 1.1305-15 resistance zone comprising the 50-DMA and 21-DMA.
During the run-up, early January swing lows near 1.1275 may offer intermediate halts whereas November 2021 low near 1.1185 acts as an additional downside filter.