EUR/USD: Bears struggle to retake control near 1.0600 despite softer US Dollar
- EUR/USD remains depressed even as US Dollar stays on the bear’s radar.
- BOJ inflicted losses on the US Dollar, Euro has fewer reasons to celebrate.
- Hawkish bias over ECB jostles with Fed rate hike expectations, oil price cap updates to test bulls.
- German PPI, US housing market numbers to decorate calendar.
EUR/USD remains indecisive around 1.0600, after the latest whipsaw, as it retreats from an intraday high during early Tuesday morning in Europe. The major currency pair’s latest moves could be linked to the US Dollar’s zigzag amid mixed concerns and a light calendar.
The US Dollar Index (DXY) marked 60+ pips of a slump to refresh the intraday low near 103.95, around 104.30 at the latest, as the Bank of Japan (BOJ) altered its Yields Curve Control (YCC) by extending the upper limit to 0.50%. On the same line could be the Japanese central bank’s readiness for more bond issuance.
The BOJ move becomes important for the DXY as Japan is one of the largest buyers of US Treasury bonds. Additionally, the BOJ’s retreat from the easy-money policy also allows the market to cheer Yen’s haven status, especially when the Fed failed to impress DXY bulls.
On the other hand, chatters surrounding China’s stimulus and the World Bank’s downgrading of Beijing's economic forecasts also flash mixed messages and challenge the EUR/USD traders.
Overall, the comparatively more hawkish bias of the European Central Bank (ECB), as per the latest comments from the policymakers, should have favored the EUR/USD buyers.
However, firmer US Treasury yields and downbeat US stock futures restrict the US Dollar’s downside move, which in turn put a floor under the EUR/USD prices. As a result, the EUR/USD traders should pay attention to the risk catalysts for fresh impulse.
That said, Germany’s Producers Price Index (PPI) for November, expected -2.6% YoY versus -4.2% prior, will precede the US Building Permits and Housing Starts for the stated month to determine immediate moves.
Technical analysis
A daily closing below the 10-DMA, surrounding 1.0585 by the press time, becomes necessary for the EUR/USD sellers. Alternatively, the previous support line from November 30, close to 1.0655, guards the short-term upside of the pair. That said, sluggish RSI and bearish MACD signals join the failure to cross the previous support line in a corrective move to keep bears hopeful.