06 Apr
Recession concerns drive EUR/USD closer to 1.0860 support despite the shift towards.
- The EUR/USD pair has been facing downward pressure after retracing from its two-month high on Tuesday.
- This could be attributed to the US Dollar’s corrective bounce, as investors turn to safe-haven assets due to recession fears and geopolitical tensions. However, the pair’s losses are being limited by weak US economic data and the European Central Bank’s comparatively hawkish stance.
- The US Dollar Index has rebounded from a two-month low, up 0.12% intraday, as investors seek refuge in the greenback amidst economic concerns and geopolitical risks stemming from China and North Korea. The S&P 500 Futures have declined for three consecutive days, while the US Treasury bond yields remain near their multi-day lows. The market’s consolidation amid the holiday mood could also lead to intraday bearish sentiment for the EUR/USD pair, with the key event to reject the bullish bias being the US Nonfarm Payrolls.
- The EUR/USD pair is currently trading near its intraday bottom at 1.0884, displaying a two-day downtrend.
- Concerns about a possible recession are growing, fueled by consecutive weak employment numbers in the US, which have raised fears about a slowdown in the world’s largest economy and the potential for contagion.
- In February, the US JOLTS Job Openings hit a disappointing 19-month low, and the March ADP Employment Change dropped to 145K, well below the expected 200K and a revision of 261K for the previous month. Additionally, the final readings for the S&P Global Composite and Services PMIs for March were also discouraging.
- The former fell to 52.3 from the preliminary estimate of 53.3, while the Services PMI dropped to 52.6 from the expected 53.8. These developments are contributing to growing concerns about a potential economic slowdown.
