August 17, 2022 01:54 AM ET
By: AnalysisWatch
As bulls and bears clash ahead of key Eurozone and U.S. data, EUR/USD remains slightly bid around the day's high, continuing the previous day's corrective pullback from a three-week low. Still, the major currency pair was hovering around 1.080 at the start of Wednesday's European session.
The recent strength in the major currency pair may be related to weakness in the U.S. dollar as well as cautious optimism in the market. The U.S. dollar index (DXY) hit its three-week high before retreating 0.10% from 106.94 to the intraday low of 106.35. The DXY losses may be related to the market's preparations for today's U.S. retail sales for July, which are expected to be 0.1% versus 1.0%, and the Fed minutes.
Also, signals from Europe to renew the nuclear agreement with Iran and to shelve plans to close the last three German nuclear power plants seemed to favor EUR/USD bulls lately. It is worth noting that the poor U.S. housing numbers and the mixed German ZEW figures do not seem to affect the pair's short-term movements.
Amid these developments, 10-year U.S. Treasury yields gave up the previous day's rally, while S&P 500 futures fluctuated near a four-month high.
Looking ahead, EUR/USD traders will want to turn their attention to the second reading of eurozone gross domestic product (GDP), which is expected to confirm forecasts of 0.7% quarter-on-quarter, ahead of preliminary eurozone employment change figures for the second quarter (Q2), which are expected to come in at 2.5% versus 2.9%. Also key will be U.S. retail sales for July, which are expected to fall 0.1% vs. 1.0%. Most importantly, the Federal Open Market Committee (FOMC) meeting minutes will be crucial as markets renew their hawkish bets on the Fed.
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