- Sellers of EUR / USD, take a breather before resuming another leg down in the pair.
- EUR / USD rallied amid dollar weakness across the board, attributed to lower US bond yields.
- The members of the ECB reinforced the moderate stance of the central bank’s monetary policy.
The euro cuts some weekly losses on the day, gains 0.04% and is trading at 1.1318 during the American session at press time. The shared currency regains some ground after falling to a new annual low around 1.1263, mainly driven by the strength of the US dollar, as the yield on US Treasuries increased close to 1.65%, but at the At the time of writing, it is holding on to a 1.60% drop almost five basis points.
Meanwhile, the US dollar appears to be affected by falling yields. The US dollar index (DXY), which measures the dollar’s performance against a basket of six rivals, fell 0.12% to 95.79, falling from 16-month highs near 96.00.
The weakening of the US dollar comes despite the Federal Reserve tightening its monetary policy. In addition, money market futures have fully discounted a rate hike for July 2022 and increased the odds of another adjustment to the US interest rate by the end of 2022. Hence, Wednesday’s move it could be seen as a correction before resuming the downtrend.
In data terms, in the euro zone, October inflation increased 4.1% annually, in line with expectations. The month-over-month reading, which moves the pair significantly, reached 0.8%, also in line with estimates, although it did not provoke any reaction in the EUR / USD.
On the other hand, the economic agenda of the US dollar presented housing data. Building permits for October rose to 1.65 million, above the 1.638 million expected by analysts. On the contrary, housing starts for the same period slowed down to 1.52 million, below the expected 1.576 million.
The statements of the ECB’s policy makers on the Eurozone CPI above 4%
Once the CPI data for the euro zone was released, some politicians made statements. Olli Rehn, a member of the ECB’s Governing Council, said price pressures would ease next year. In the same vein, Bruno Le Maire, the French Finance Minister, reinforced the “temporary” thesis, saying that it is transitory, but added, “we have to be attentive to this.”
On the contrary, taking a more neutral stance, the member of the Governing Council of the ECB and director of the National Bank of Belgium, Pierre Wunsch, said that “we must all be patient, but we must not exclude that the inflationary forces are quite strong and in sometime it will require a reaction. “
Technical levels
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