EUR/USD Slips Amid US Dollar Strength, Investors Eye Key Data Releases
EUR/USD traded under pressure heading into the weekend, with New York opening near 1.0885 after fluctuating between 1.09017 and 1.08765 overnight. An early rally to 1.0895 met resistance, as US yield gains spurred US dollar buying, pushing USD/CNH up to 7.2865. The widening DE-US spreads added further pressure on EUR/USD, which dipped below 1.0880 and ended the day down -0.11%. Despite this, the technical outlook remains bullish, supported by a rising monthly RSI and the pair holding above multiple moving averages and the daily cloud.
The dollar strengthened on Friday, moving away from recent lows as markets reacted to a tech outage impacting various industries and looked ahead to significant data releases next week, including the Fed’s favored inflation measure. The outage, due to a software update by cybersecurity firm CrowdStrike, bolstered the dollar’s safe-haven appeal. Investors are focused on next Friday’s PCE release, which could confirm expectations for Fed interest rate cuts this year. While some of the rate cut optimism has cooled, the futures market still anticipates two quarter-point reductions this year, with a strong chance of a third, and projects 100 basis points of easing by the U.S. central bank by March.
U.S. Treasury yields increased by 4-6 basis points across maturities, with the 2s-10s curve remaining around -27 basis points. The curve has steepened from -50 basis points in late June, reflecting increased market confidence in Donald Trump’s potential reelection and the associated fiscal, tax, and trade policies.
The S&P 500 fell 0.59% by afternoon trade in New York, deepening its decline from recent record highs driven by tech stocks and mixed earnings. Investors were also evaluating the impact of the cyber outage on CrowdStrike’s shares. WTI crude oil prices dropped 3.19%, influenced by renewed hopes for a Gaza ceasefire and a stronger dollar. Copper fell 1.04%, marking its fifth consecutive session of losses and hitting a three-month low due to concerns over China’s economic weakness and lack of stimulus announcements. Gold slid 1.89% as the dollar strengthened and profit-taking occurred after reaching an all-time peak earlier in the week, spurred by expectations of a U.S. interest rate cut in September.
