August 24, 2022 12:27 AM ET
By: AnalysisWatch
The EUR/USD pair is displaying back and forth movements in a narrow range of 0.9944-0.9956 during the Asian session. The asset has turned sideways after a decent correction above the magic 1.0000 figure. In the broader context, the EURUSD pair remains favored to decline. Earlier, the assets rebounded firmly after printing a fresh two-decade low near 0.9900 as the German Purchasing Managers' Index (PMI) posted a mixed performance despite a vulnerable consensus.
The U.S. Dollar Index (DXY) posted a mediocre performance after a firmer rebound from Tuesday's low of 108.36. The assets rallied despite a serious contraction in the private sector. The U.S. PMI index contracted sharply as the Federal Reserve (Fed) raised interest rates. However, the DXY has regained strength as the Fed will continue its policy of raising interest rates at a similar pace, despite the headwinds of a contraction in economic activity.
Looking ahead, market participants will focus on U.S. durable goods orders. This economic data is expected to contract by 0.6% from the previous release of 2%. This also indicates a decline in aggregate demand in the U.S. economy and could lead to further pressure on the U.S. Dollar Index (DXY).
However, bulls in the shared currency are concerned about the potential energy crisis in Germany. An unplanned three-day interruption in energy supplies for maintenance on the Nord Stream 1 pipeline could accelerate the imbalance in the supply and demand mechanism. Germany is a key member of the European Union (EU), and the situation of an energy crisis in the aforementioned area will have a significant impact on the Eurozone.
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