- EUR/USD bullishness in check as dollar helped by yield and jobless claims.
- The US retail sales in focus
- EUR/USD four-hour chart bullish today
The strength in the US dollar might not be sustainable, and the EUR/USD might come back in favor.
The rise in yield after the US Treasury auctions helped the dollar to gain in tandem. The 38 billion dollars offering of the 10-year notes on Wednesday was successful, snapped up by all at a brisk pace sending the yield lower as well as the dollar. But, the 30-year bond auction didn’t get the same response, and the yield spiked higher, taking the dollar along.
The dent in the hope for a stimulus package might have also increased the US debt yield. The signs of a pause in the communications between the Democrats and the Republicans are worrying the markets.
Funding for the Post Office – as a deluge of postal-ballots during elections can’t be ruled out is a point of contention between both parties. Democrats are arguing for more funds, but Trump is hesitant, even though he had used mail-in ballots many times.
The impasse means higher spending will be required to revive the economy later.
A better explanation for the dollar strength could be the encouraging drop in initial jobless claims yesterday, falling for the first time below the million marks since the start of the pandemic.
Also, the continuing claims fell below 16 million, inspiring the dollar buys.
The US economy strength will have another test today as July retail sales are due. The last two months saw a good jump in the numbers; the expectations are for a slower increase. The government stimulus was in full form in July, but the continued coronavirus worries might have lessened the enthusiasm.
Dollar fortunes are now finely balanced in anticipation of the report. An upside surprise could push the dollar up while a small miss could pull it down.
Covid-19 cases in the US are now keeping at 50,000 a day, and the deaths are also more than 1000 a day. Europe also reported more cases, Spain has daily numbers of 3,000, France has more than 2000 infections a day, and Germany has above 1000 cases almost every day.
The US situation is visibly far worse than in Europe.
The update on the second-quarter GDP from the Eurozone is expected to confirm a drag of 12.1 Percent and might not affect market mood.
The University of Michigan’s Consumer Sentiment Index for August preliminary release is also due in the US session, apart from the retail sales.
In summary, EUR/USD is ready to rise but subject to many factors affecting the theme.
