Market update: euro steadied the ship ahead of CPI as Treasury yields leap

The EUR steadied today after overnight losses as the US dollar eased in Asia today, in line with Treasury yields after a solid uptick in both going into the North American close.

The greenback posted gains across the G-10 board with the exception of Sterling, which gained after massive beats across UK PMIs.

European CPI data from several regions today will provide the last pieces of the puzzle before the Euro-wide inflation gauge tomorrow.

So far today the Aussie dollar is the laggard against the ‘big dollar’ after the domestic Wage Price Index came in below forecasts at 3.3% rather than the 3.5% anticipated.

The New Zealand dollar has had a whippy day after the RBNZ delivered a 50 bp hike as widely expected. The language in the post-decision presser was more hawkish than expected due to several natural disasters disrupting the economy this month.

Treasury yields added across the curve yesterday with the largest upticks seen in the back end of the curve before they gave up a few basis points (bp) today. The two-year note traded above 4.70% as it eyes the November peak of 4.88%, the highest since 2007.

At the same time that Treasury yields hover higher, gold continues to languish, trading under US$ 1,840 an ounce.

Crude oil has had a quiet day with the WTI futures contract near US$ 76 bbl while the Brent contract is close to US$ 83 bbl.

Wall Street tumbled overnight on concerns that the Fed rate hikes might be starting to take their toll. APAC equity indices are slightly softer on the day and futures are indicating a steady start to the North American cash session.

Looking ahead, after the European CPI data, the FOMC meeting minutes will be the focus for markets.

EUR/USD technical analysis

Overall, EUR/USD remains in an ascending channel. It has been in a 1.0613 -1.0805 range for 6 weeks and these levels may provide support and resistance respectively.

The 21-and 34-day simple moving averages (SMA) lie near a breakpoint of 1.0770 and might offer resistance.

On the downside, nearby support might lie at the previous lows at 1.0483 and 1.0443. The latter is being dissected by the 100- and 260-day SMAs and may lend support.

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