Should we keep a close eye on the direction of the weakening euro?
03.08.2022
- Eurozone Producer Price Index
- MIS/ISM Non-Manufacturing Purchasing Managers' Index
In contrast to the continued decline in U.S. stock prices, the U.S. dollar rose yesterday. As bonds were sold off and the yield on the 10-year U.S. Treasury note rose again to 2.71%, the Dollar Index also rebounded to the 106 level. The EUR/USD pair, which had appeared poised to rise, fell back from 1.2093 to 1.0162, marking a decline of approximately 130 pips.The pair appears to have pulled back after being capped by the 200-period SMA on the 4-hour chart, but we will be watching closely to see if it can rise again around the 20-period MA on the daily chart.
European currencies are trading lower against the pound ahead of tomorrow’s policy rate announcement, with the euro/pound pair falling approximately 60 pips from 0.8400 to 0.8339. The downward trend in the euro/pound pair, which began after it hit this year’s high of 0.8719 on June 15, shows no signs of stopping, and the pair has now fallen below the 61.8% Fibonacci retracement level on the daily chart.It remains to be seen whether tomorrow’s BOE policy rate announcement will accelerate this decline.
Today, during Asian trading hours, Germany’s trade balance will be released at 15:00, followed by Switzerland’s Consumer Price Index at 15:30. During European trading hours, Turkey’s Consumer Price Index and Producer Price Index will be released at 16:00, followed by France’s Services PMI at 16:50, the UK’s Services PMI at 17:30, and the Eurozone’sProducer Price Index, at 8:00 PM the U.S. MBA Mortgage Applications Index, at 10:45 PM U.S. time the U.S. Services PMI, at 11:00 PM the U.S. ISM Non-Manufacturing Index, at 11:30 PM U.S. weekly crude oil inventories, remarks by U.S. Federal Reserve Bank of Philadelphia President Harker, and at 12:45 AM remarks by U.S. Federal Reserve Bank of Richmond President Barkin.We should pay close attention to price movements following the release of the final PMI figures during European trading hours.
Author: Keisuke Sakurai
