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.
