- EUR/USD is having a hard time gaining traction and oscillating in a tight trading band.
- The rebound in US bond yields and recession fears revive demand for the dollar and act as a headwind.
- Uncertainty about the Fed’s rate hike path constrains the dollar and offers some support.
The EUR/USD pair is trading in a range of approximately 40 pips, oscillating in a narrow trading band on Thursday between the 1.0490 and 1.0530 zone. The pair is currently hovering around the 1.0500 psychological mark, almost unchanged on the day.
Following the previous day’s pullback, the US dollar regains some positive traction, acting as a headwind for the EUR/USD pair. Recent positive US economic data fueled speculation that the Fed may raise rates more than recently anticipated. This, in turn, boosts US Treasury yields, which, coupled with mounting recession fears, reignites demand for the safe-haven dollar.
On the other hand, the common currency is affected by the decrease in the probability of more aggressive rate hikes by the European Central Bank (ECB). Furthermore, concerns over economic difficulties stemming from the protracted conflict between Russia and Ukraine are helping to limit gains in the EUR/USD pair. However, bets on a 50 basis point Fed rate hike in December cushion the declines.
Strong expectations that the US central bank will slow the pace of its monetary policy tightening is holding back USD bulls from making further bets and providing some support to the EUR/USD pair. Therefore, attention remains focused on the highly anticipated FOMC monetary policy meeting to be held on December 13-14. The ECB is also scheduled to announce its decision on Thursday, which should provide further directional impetus to major currencies.
Meanwhile, weekly US jobless initial claims data will be released on Thursday, due to be released early in the North American session. This, along with US bond yields and broader risk sentiment, could influence USD price dynamics and allow traders to take advantage of short-term opportunities around the EUR/USD pair.
EUR/USD Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
