The US 10-year benchmark now trades at a yield of 2.77%, lower from a high of under 3.50% over many years in July, as rates markets factor in a halt in interest rate increases. The inflation statistic from Wednesday reduced estimates of a 75 basis point rise in interest rates at the FOMC meeting in the coming month from over 70% to around 40%.
Although the US dollar is weaker, it is not yet gone and is still hunting for a basis. The increase is still clearly visible on the daily chart, and a block of previous highs and lows around 104.92 and 103.20 is anticipated to act as support in the scenario that the dollar continues to weaken.
While the euro is strengthening versus the US dollar, there are currently no compelling underlying motives to purchase the currency. Food costs are skyrocketing, the economy is slowing, there is widespread inflation, and there are no indicators that the energy crisis will end soon. Additionally, the Rhine river in Germany has exceptionally low levels of water, making it practically hard for barges transporting commodities and energy to reach their designated enterprises.
After trading under parity on July 14, the Euro has since pushed higher versus the US dollar. There is not much resistance left before 1.0500 enters the picture if this mark is decisively breached.
52.38% of traders have net long positions. While the number of traders who are net-short has increased by 6.13% and 17.89% since Wednesday and the week before, the number of traders who are net-long has decreased by 12.31% and 20.26% over the respective timeline.
Traders’ net-long position signals that the EUR/USD price may drop further. However, relative to last week and Wednesday, traders are less net-long. Ongoing shifts in position indicate that, despite traders’ continued net-long positions, the present EUR/USD market trend may shortly flip upward.