EUR USD

Warsh's comments accelerated the EUR/USD selloff, raising the stakes as buyers look to stabilize the broader recovery.

For much of this week, the EUR/USD has been edging lower with the US dollar regaining some ground after last week’s sell-off that was triggered, in part, by the bond market worries. Investors have been unwilling to bet further against the US dollar so far this week ahead of Kevin Warsh’s keynote speech at the Jackson Hole summit, due later today.

Today's session has not been particularly favorable for the euro. Recent EUR/USD price action shows a decline of approximately 0.2% in favor of the U.S. dollar, a move largely driven by the release of the U.S. PCE inflation report and the recent recovery seen in the bond market.

But the question, of course, is how much further oil prices and bond yields can fall. For now, the combination is supportive of risk assets and is helping to sustain a relatively benign decline in the dollar. The focus today will be on US core PCE inflation, due for release shortly, while Nvidia’s second-quarter earnings will provide another test for risk appetite after the US markets close – not just for US indices but for global tech-heavy indices given the influence Nvidia has over the global tech and AI names.

Oil falls further on diplomatic hopes for a Middle East resolution. EUR/USD consolidates ahead of U.S. inflation and Jackson Hole.

The US Dollar has extended a series of lower-lows and highs and tomorrow brings the Fed’s preferred inflation gauge of Core PCE. It still feels to be a USD/JPY market, but larger bullish themes have built in gold and BTC as a world fueled by debt doesn’t look to soon be turning towards austerity or fiscal prudence.

The relative calm in the energy and bond markets have allowed the US dollar and equities to make a slightly positive start to the week. America’s economic war on Iran also failed to trigger any panic, leaving investors with little to chew over until the release of US inflation data on Wednesday and Kevin Warsh’s speech at the Jackson Hole Symposium on Friday.

EUR/USD flashes reversal signals after a powerful move higher, just as markets wait for Scott Bessent to provide more detail on how he plans to take pressure off the long end of the US curve.

Last week’s main theme has been a shift away from the US dollar towards currencies of economies with stronger fiscal positions and lower debt levels. The brief rally in long-dated US Treasuries helped fuel gains in gold and silver, while the Swiss franc also benefited from increased haven demand. The euro has performed reasonably well too, with the Eurozone economy continuing to expand modestly despite geopolitical uncertainty and higher energy prices.

The US Dollar set a fresh lower-low and then stalled as rate markets continue to harbor the expectation that the Fed will hike later this year. But if looking at this through USD/JPY, the matter gets a bit more complicated.

This week’s main theme has been a drive away from the dollar and into currencies of economies with better fiscal discipline and lower debt levels. The short-lived rally in US long-dated bonds fuelled rallies in gold and silver prices, which, along with the like of Swiss franc, benefitted further from increased haven flows.

The Eurozone Manufacturing PMI is seen edging up to around 52.0, while Services PMI is expected to slip slightly to 51.5 - what could it do to EUR/USD?