- The ECB Minutes show that some members want to keep the door open for a further hike in July.
- Markets hold onto gains, S&P 500 up 1.09%.
- EUR/USD is headed for the lowest daily close since December 11, 2002.
The EUR/USD failed to hold daily gains and fell to test the 1.0160 area. The weakness of the euro pushed the pair lower despite the recovery in share prices.
Immediate support is the 1.0160 area and a break lower would expose 1.0120. On an intraday basis, a recovery above 1.0190 would help the euro back to 1.0200. The next resistance levels are located at 1.0220, followed by 1.0235.
EUR/USD fails to recover
Despite improving market sentiment, the euro remains one of the weakest currencies and faces expectations of a slide back towards EUR/USD parity. Doubts about the anti-fragmentation instrument weigh on the euro. The dollar index falls marginally and stands around 107.00.
US yields are higher and supportive of the USD. The US 10-year yield stands at 2.99%, and the 30-year yield stands at 3.17%. The Dow Jones rose 0.95% and the S&P 500 gained 1.22%.
The European Central Bank publishes the minutes of its last meeting. According to Commerzbank economists, the document reveals strong discontent among members regarding the inflation outlook. “Given the reasoning of the Board members at the June meeting, a 50 basis point increase in key interest rates at the next meeting in July cannot be ruled out. We remain at 25 basis points in our baseline scenario, mainly because most of the recent statements by Council members continue to point in that direction.”
In the US, economic data showed an increase in initial jobless claims and a narrowing in the trade deficit in May. The figures were ignored by market participants. The official report on employment will be published on Friday. The market consensus is for an increase of 270,000 jobs and for the unemployment rate to remain at 3.6%.
“The recession has dominated the market psychology. A stronger payrolls report will defy the risk of that in the short term. We expect this to contribute to USD resistance, especially with EURUSD, which is inevitably headed for parity,” they said. analysts at TD Securities.
Technical levels
Source: Fx Street
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