EUR/USD Faces Downward Pressure Amid Strengthening USD and Economic Indicators

In the early Asian trading hours on Thursday, the EUR/USD pair’s momentum dwindled around the 1.0500 mark. A robust US Dollar (USD), buoyed by positive US economic data and an upsurge in the Treasury yield, reinforces the central pair’s selling pressure. The EUR/USD is trading close to 1.0512, marking a 0.09% gain for the day.

The US Dollar Index (DXY), reflecting the USD’s value against a set of foreign currencies, escalates to a peak of 106.60, unseen since November, while the 10-year Treasury yield ascends to its zenith since 2007 at 4.618%. Unfavorable economic data from the Eurozone is enhancing the Euro’s selling pressure, posing a barrier to the EUR/USD pair’s progress. A decline in German Consumer Sentiment as reported by GfK, coupled with impending inflation data from Spain and Germany, plays a critical role in shaping monetary policies and potential market impact.

In the United States, a Wednesday report from the US Census Bureau highlighted a rebound in US Durable Goods Orders in August, exceeding expectations and bolstering the USD across various sectors, further hampering the EUR/USD pair. Amid concerns of a looming US government shutdown and anticipation of Federal Reserve Chair Jerome Powell’s forthcoming address, investors’ inclination towards risk-aversion is perceptible.

Moving forward, the market’s focus is poised on the upcoming release of preliminary inflation figures from Spain and Germany for September and additional economic data from both the Eurozone and the United States. The impending data, including the US Core Personal Consumption Expenditure (PCE) Price Index on Friday, will potentially offer traders significant insights, guiding the future direction of the EUR/USD pair.