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MTrading Team • 2023-09-22

EURUSD remains pressured on neutral ECB talks, PMIs eyed

EURUSD remains pressured on neutral ECB talks, PMIs eyed

Market sentiment remains mixed on early Friday as traders await the key PMI data from the Eurozone, the UK and the US. Apart from the pre-data anxiety, the recently released mixed prints of the US statistics and the hopes of witnessing more fund inflow to Asia put a floor under the riskier assets despite the firmer US Dollar.

That said, the US Dollar Index reverses the previous day’s retreat from the multi-day high while tracking the firmer US Treasury bond yields. However, the prices of gold and crude oil extended the previous day’s rebound.

Elsewhere, the Wall Street benchmarks closed in the red but the Asia-Pacific equities edge higher.

It’s worth noting that the mostly dovish commentary from the ECB policymakers and the BoE’s policy pause weighs on the EURUSD and the GBPUSD prices. Further, USDJPY rises half a percent to reverse the previous day’s retreat as BoJ keeps the monetary policy unchanged and the yields remain firmer.

Talking about the cryptos, BTCUSD and ETHUSD both snap a two-day losing streak while paring the biggest daily loss in a fortnight.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s recovery from the weekly low to $93.65 at the latest.
  • Gold price also remains on the front foot while snapping three-day losing streak to near $1,929, up half a percent by the press time.
  • USD Index stays mildly bid around 105.55 after rising to 6.5-month high earlier in the day.
  • Wall Street closed with losses but the Asia-Pacific stocks edged higher. That said, equities in Europe and the UK edged lower at the latest.
  • BTCUSD and ETHUSD print mild gains to around $26,700 and $1,600 as we write.
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Lack of momentum triggers market consolidation but US Dollar remains firmer

Mixed US data allowed the US Dollar bulls to take a breather at the multi-day high the previous day but the unimpressive statistics and central bankers’ comments from the Eurozone and the UK defended the Greenback afterward. Adding to that are the fears about the US government shutdown as the debt ceiling expires in late September. Furthermore, hopes that more fund flow in Asia will help China to defend its economic recovery and also prod the USD.

However, BoJ’s defense of easy-money policy and the market’s rush towards the US dollar, especially amid the multi-year high yields, keep the pessimism intact and weigh on the riskier assets.

A slew of ECB policymakers crossed wires during late Thursday and early Friday. Among them, the majority were in favor of keeping the rates unchanged while some anticipated a rate cut in early 2024, which in turn exerts downside pressure on the EURUSD. Further, downbeat UK Retail Sales join the BoE’s status quo to weigh on the GBPUSD pair while USDJPY bears the burden of the BoJ’s dovish halt. That said, Gold price justifies its haven status while hopes of more demand from China renew crude oil buying.

To sum up, the dicey markets may keep the traders on their edge ahead of the key PMIs.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Nothing more important than the PMIs

Moving on, a slew of PMIs will offer an active day for the market players even as the US Dollar is likely to keep its place on the bull’s radar. During the next week, US government shutdown talks and China PMIs will be in the spotlight.

May the trading luck be with you!