EURUSD extends pullback from weekly high with eyes on key US, EU data

A cautious mood prevails in the market as traders brace for this week’s top-tier data/events, especially with the US Dollar’s corrective bounce despite downbeat data. Also challenging the sentiment are the risk-negative geopolitical headlines, which in turn exert downside pressure on the commodities and Antipodeans.

With this, the US Dollar Index (DXY) posts another rebound from the 200-SMA while the Gold price drops toward short-term key supports. Further, Crude oil prods the two-day winning streak despite supply-crunch woes whereas NZDUSD drops the most among the G10 currency pairs due to the RBNZ’s dovish halt. Further, AUDUSD and GBPUSD also pare the recent gains while USDJPY prints mild gains within a weekly trading range.

Elsewhere, Wall Street closed mixed and the Asia-Pacific shares edged lower while the US stock futures also printed minor losses by the press time.

Apart from the broad-based recovery in the US Dollar and the yields, cryptocurrencies remain firmer at the multi-month highs marked the previous day. That said, an all-time high of the capital inflows to Bitcoin and optimism about Ethereum favors the BTCUSD and ETHUSD bulls of late.

Following are the latest moves of the key assets:

• Brent oil struggles to extend the two-day uptrend around $83.00, mildly offered by the press time.
• Gold price stays pressured for the third consecutive day to around $2,028 at the latest.
• USD Index crosses the 104.00 threshold while extending the previous day’s rebound from the 200-SMA.
• Wall Street closed mixed but Asia-Pacific stocks drifted lower. Further, the shares in Europe and the UK lack clear directions during the initial hour.
• BTCUSD and ETHUSD both seesaw near the multi-month high to around $57,200 and $3,260.

US Dollar rebounds ahead of US GDP, Fed inflation…

The US Dollar picks up bids ahead of this week’s key statistics, especially amid hawkish Fed concerns and talks about the US soft-landing. In doing so, the greenback ignores recently downbeat US data.

On Tuesday, US Treasury Secretary Janet Yellen ruled out pressure on global prices due to the Red Sea tensions unless the situation worsens, which in turn joined the repetitive tone of the Federal Reserve (Fed) officials to challenge the momentum. However, the US Dollar Index (DXY) bounced off weekly lows, despite downbeat prints of the US Durable Goods Orders and CB Consumer Confidence Index, as traders brace for this week’s key data. That said, Fed Governor Michelle Bowman cited the need to be cautious while cutting down on rates, defending the “higher for longer” rate bias and teasing the US Dollar bulls.

Elsewhere, US Senators are optimistic about getting a deal to avoid the government shutdown and hence favored the slightly positive sentiment in the US, as well as helping the yields and the Greenback to pare recent losses.

It’s worth noting that an improvement in the regional activity numbers from the US, namely from the Federal Reserve offices of Richmond and Dallas, allowed the US Dollar to edge higher. Furthermore, the Atlanta Fed’s GDPNow Q1 estimate also improved to 3.2% versus 2.9% reported a week earlier, which in turn helps the Greenback to pare recent losses.

On a different page, China's Vice Foreign Minister’s indirect signals to strengthen ties with Russia and the Middle East tension also prod the XAUUSD bulls, especially when the US Dollar recovers.

That said, the Gold price bears the burden of the US Dollar’s rebound, and the Oil price edges higher as Reuters released a story suggesting an extension in the OPEC+ supply cut accord through Q2 2024.

Elsewhere, an improvement in German Consumer Confidence for March and hawkish comments from the European Central Bank (ECB) officials failed to inspire the EURUSD buyers amid a comparatively strong rush toward the US Dollar. Further, Bank of England (BoE) Deputy Governor Dave Ramsden cited the presence of inflation pressure but the US Dollar’s rebound challenged the GBPUSD buyers, pushing it toward posting a bearish Doji candlestick on the daily chart and dragging it down so far on Wednesday.

• Strong buy: USDCAD, USDJPY
• Strong sell: Crude Oil, US Dollar, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

US data, Fed talks eyed…

Looking forward, the second estimation of the US Q4 GDP and Goods Trade Balance for January will join the Fed talks to entertain the momentum traders. However, major attention will be given to Thursday’s US Personal Consumption Expenditure (PCE) Price Index data, also known as the US Federal Reserve’s (Fed) preferred inflation gauge. To sum up, the volatility is likely to increase and can extend the latest recovery in the US Dollar. However, the scheduled catalysts need to defend the Fed hawks for that to happen.

May the trading luck be with you!