- The dollar is no longer safe enough with the Fed accepting the possibility of a recession.
- Treasury yields are pushing lower on recession concerns.
- The price is caught in an ascending triangle in the charts.
After a bullish close yesterday, the EUR/USD outlook remained positive on Thursday. The US dollar is being weighed down by Treasury yields, which are pushing lower on recession concerns. The fears of the consequences of the Federal Reserve’s war on inflation have sent the 10-year Treasury yields to a two-week low.
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Fed Chair Jerome Powell did not give investors any hope when he said in his testimony that a recession was a possibility.
“Powell’s semi-annual testimony has taken some steam out of the USD, his comments regarding elevated recession risk weighing more than his unconditional commitment to restore price stability,” Westpac strategists wrote in a client note.
EUR/USD key events today
EUR/USD investors will look for Purchasing Managers’ Index data from Germany and the Eurozone. This news will give clues on whether the activity level of purchasing managers in the manufacturing sector has grown or decreased. It is a leading indicator of economic performance. The EU Leaders’ Summit is expected to start today, where investors expect Ukraine to be approved as an EU candidate. Candidature is the first step toward becoming a member of the EU.
The United States will also be releasing PMI data and a jobless claims report, which will show the number of people who filed for unemployment insurance for the first time last week. Finally, Fed Chair Powell will continue with his testimony later today.
EUR/USD technical outlook: Bulls struggling to break above 1.0600
Looking at the 4-hour chart, we see the price is pushing higher within an ascending triangle. The RSI is trading above 50, and the price is trading above the 30-SMA, showing bulls are in control. It is important to note that bulls have been unable to make consistent higher highs and are experiencing a lot of resistance at 1.0600.
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This resistance shows many bears stationed at the 1.0600 level, waiting to push the price lower every time bulls take it there. If bulls fail to break through this level, the ascending triangle might be a continuation pattern for the previous bearish trend. All the bears would have to do is break below 1.0500.
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