EUR/USD sinks to four-week lows below 1.0900

• The EUR/USD pair falls to 1.0916 as the US PPI slows and the increase in Unemployment Benefits claims, which strengthens the Dollar.
• US Treasury yields fall on anticipation of three rate cuts by the Federal Reserve through December 2023.
• ECB spokesmen emphasize the slowdown in inflation in the Eurozone, with new rate hikes on the table.

The pair EUR/USD had a bullish start to the week, but crashed to four-week lows around 1.0899 on Thursday. The main reason for the dollar’s strength was falling US bond yields, as inflation data continues to slow, while rising jobless claims suggest the labor market is loosening. EUR/USD is trading at 1.0916, near weekly lows, down more than 0.50%.

The slowdown in inflation and the easing of the labor market boost the dollar and send the EUR/USD down more than 0.50%

The US Department of Labor released inflation data on the producer side, known as the Producer Price Index (PPI) for April, with a slowdown in headline and core PPI of 0.01% in annual data , while the monthly readings in both cases stood at 0.4%. Despite the data being negative for the US dollar and positive for the euro (EUR), traders took profits on the EUR/USD reaction; Simultaneously, the pair sank below the 20-day EMA of 1.0972.

In other data, initial claims for jobless benefits topped estimates of 245,000 for the week ending May 6 and rose by 264,000 as Minnesota Fed President Neil Kashkari crossed the news wires. He said that although inflation is cooling off, it remains more robust. And he added: “We will have to continue like this for a long period.”

Following the data release, US Treasury yields eased as investors began pricing in three 25 basis point rate cuts by the US Federal Reserve ahead of the meeting. December 2023, according to CME’s FedWatch tool. US 2-year and 10-year bond yields continued to post losses of 1.5 points, respectively, at 3.897% and 3.386%.

In the Eurozone (EU), spokespersons for the European Central Bank (ECB) continued to insist that inflation is slowing, with the Cos ECB commenting that the EU central bank is about to close its latest cycle of price hikes. interests. ECB Vice President De Guindos echoed de Cos’s comments on inflation, but left the door open for further rate hikes.

upcoming events

The Eurozone economic agenda will include inflation data for France and Spain, as well as the current account for Germany. Luis De Guindos, from the ECB, will give statements. In the US, the University of Michigan Consumer Sentiment will be released, along with speeches from the Federal Reserve.

EUR/USD technical levels