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EUR/USD Maintains Gains After Powell's Comments, Eyes U.S. CPIs

Published 01/10/2023, 03:54 PM
Updated 07/09/2023, 06:32 AM

The EUR/USD pair advanced slightly on Tuesday, although it was rejected by the 1.0760 area. As investors await U.S. Consumer Price Index (CPI) figures on Thursday, Jerome Powell refrained from commenting on the Fed's next move at the Riksbank's International Symposium on Central Bank Independence in Sweden.

When writing, the EUR/USD trades at the 1.0740 area, posting a 0.13% daily gain. The pair struck a six-month high of 1.0760 on Monday and has been trading in a narrow range nearby ever since.

Movements across the FX board are limited due to the lack of significant catalysts. Market participants await news on U.S. inflation as the nation will release its December Consumer Price Index (CPI) on Thursday.

The annual inflation reading is expected to ease to 6.5%, down from the prior month's 7.1% rate, while the core gauge is foreseen at 5.7% from 6% in November.

Meanwhile, U.S. bond yields recovered on Tuesday as the United States 2-Year, 5-Year, and 10-Year bonds yield 4.27%, 3.75%, and 3.63%, respectively, all posting more than 1% daily gains.

However, the dollar, as measured by the DXY index, failed to capitalize on the rising yields and trades virtually unchanged at the 103.25 level.

Meanwhile, the WIRP tool suggests that the Fed tightening expectations have eased as the markets have already priced in a 25 bps hike at the February 1 meeting, while odds of a 50 bp increase hover below 30%.EUR/USD Daily Chart

From a technical perspective, the EUR/USD pair holds a short-term positive bias according to the indicators on the daily chart, while the price trades above its main moving averages.

If EUR/USD manages to overcome the 1.0760 barrier, the next resistances could be faced at the 1.0800 psychological mark and the 50% retracement of the 1.2266-0.9535 decline at 1.0900.

On the downside, the following support levels are seen at the 20-day SMA around 1.0632 and the 1.0510 zone.

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