- EUR/USD oscillates in a narrow trading band on Tuesday amid mixed fundamental cues.
- Traders also opt to wait on the sidelines ahead of this week’s key central bank event risks.
- The downside seems limited amid reduced bets for more aggressive easing by the ECB.
The EUR/USD pair struggles to capitalize on its strong gains registered over the past two days and oscillates in a narrow trading band during the Asian session on Tuesday. Spot prices currently trade around mid-1.0800s, nearly unchanged for the day and just below a one-week high touched on Monday.
Traders now seem reluctant and prefer to wait for this week’s key central bank event risks before placing aggressive directional bets, which, in turn, leads to the EUR/USD pair’s subdued range-bound price action. The Federal Reserve (Fed) Chair Jerome Powell’s congressional testimony on Wednesday and Thursday will be looked upon for cues about the rate-cut path. This, along with the European Central Bank (ECB) monetary policy decision on Thursday, will help in determining the near-term trajectory for the currency pair.
Apart from this, investors this week will confront the release of important US macro data scheduled at the beginning of a new month, including the closely-watched monthly employment details, or the Nonfarm Payrolls (NFP) report on Friday. In the meantime, reduced bets for rapid interest rate cuts by the ECB continue to act as a tailwind for the shared currency. The US Dollar (USD), on the other hand, is undermined by expectations that the Fed will start cutting rates in June and lends support to the EUR/USD pair.
That said, a slight deterioration in the global risk sentiment – as depicted by a softer tone around the equity markets – is seen benefitting the safe-haven Greenback and capping the upside for the currency pair. This, in turn, makes it prudent to wait for strong follow-through buying before positioning for the EUR/USD pair’s recent goodish rebound from sub-1.0700 levels, or a three-month low touched on February 14. Traders now look to the final Eurozone Services PMIs for some impetus ahead of the US ISM Services PMI.
