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MTrading Team • 2022-12-09

EURUSD bulls cheer USD weakness, cautious optimism ahead of US data

EURUSD bulls cheer USD weakness, cautious optimism ahead of US data

A cautious optimism in the markets prevailed ahead of the second-tier US data during early Friday. The mildly positive sentiment joined hawkish comments from the ECB policymakers and downbeat US data to propel the EURUSD prices toward the monthly high.

On a broad level, the US Dollar remains pressured as traders expected another round of softer US statistics to challenge the Fed hawks during the next week’s FOMC. 

The same allowed commodities and Antipodeans to remain on track for the third weekly gain. Among them, crude oil is a gainer, despite marking the 0.10% intraday upside, as hopes of more demand from China joined softer USD to support the energy price around the yearly low. Gold also remains firmer due to its traditional safe-haven status and links with China.

Equities grind higher in the Asia-Pacific zone but struggle for directions in the West even as Treasury yields keep flashing recession risk.

Cryptocurrencies were also mixed as pessimism surrounding the industry norms probed buyers despite the downbeat greenback.

Following are the latest moves of the key assets:

  • Brent oil bounces off yearly low, gains 0.10% around $77.00.
  • Gold prints three-day uptrend around $1,793.
  • USD Index remains pressured around 104.50 during the third negative day.
  • Wall Street closed positive but stocks in Europe and the UK are indecisive by the press time.
  • BTCUSD prints mild losses around $17,200 whereas ETHUSD stays defensive near $1,280.
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Silence before the storm

Although the US Dollar weakness joined upbeat headlines surrounding China and rejections of the US recession to favor a risk-on mood, the geopolitical woes and less attention to data from Beijing and Canberra restricted the momentum. Also likely to have challenged the traders could be the cautious mood ahead of today’s US consumer sentiment data, the only key figures of the week, as well as the next week’s slew of central bank meetings and inflation figures.

Amid these plays, EURUSD turned out to be a gainer as traders sense a divergence between the ECB and Fed policy. The same could be true for USDJPY which cheered the hopes of tighter monetary policy from BOJ.

Crude oil licks its wounds near the yearly low while gold rises 0.25% intraday. Further, AUDUSD could benefit from the upbeat China CPI, as well as the risk-on mood.

Elsewhere, US SEC tries to assess the health of the crypto industry and raise regulatory fears. On the same line was the EU verdict to reveal crypto transaction data.

  • Strong buy: GBPUSD
  • Strong sell: ETHUSD, USDJPY
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

The last day of inaction

Even as markets are gung-ho over the US sentiment data, it’s less likely to offer any major entertainment as traders are all cautious ahead of a bumper week comprising multiple central bank meetings and inflation data. Even so, a softer outcome may allow the USD bears to keep the reins before the key week.

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