- EUR / USD remains under pressure as the US dollar maintains gains on Friday in a quiet session.
- Treasury Secretary Yellen pushes for Biden’s plan, Kaplan takes the lead to negotiate cuts.
- Sluggish markets against the backdrop of China and Japan await retail sales in Germany in March.
- Last month’s US PMI and concerns about Russia and China will also be key.
EUR / USD sellers are attacking the 1.2018 intraday low ahead of Monday’s European session. In doing so, the major currency pair is smoothing out an early Asian rebound from a weekly low as the US dollar continues to rally on Friday.
While holidays in China and Japan are limiting market movements, comments from US Treasury Secretary Janet Yellen and Secretary of State Anthony Blinken, not to mention Dallas Fed President Robert Kaplan, help the US dollar index (DXY) stay strong around 91.30, its highest level since since. April 22.
While US Treasury Secretary Yellen believes the Biden plan is necessary, while pushing for tax increases, Secretary Blinken has shown a willingness to monitor the situation in China. In addition, Fed’s Kaplan becomes the first among policymakers to show willingness to negotiate cuts.
Not only the US, but also New Zealand and the UK are also expressing concerns about Beijing, while Russia and Iran, among others, point to geopolitical risks.
Elsewhere, covid problems are strong in Asia, but markets remain promising as the global marketplace helps reach India.
Against this backdrop, S&P 500 futures are posting 0.30% intraday gains, despite lack of activity in key Asian markets limiting activity.
Going forward, retail sales in Germany in March, which are expected to rise from -9.0% to -3.1%, will be an immediate catalyst for traders in the EUR / USD pair. While the numbers are likely to recover, disappointment in the data will generate more reactions than it would otherwise. After that, the US April PMI and risk factors will be critical for the EUR / USD trader.
Read: US Purchasing Managers Index, April Manufacturing Survey: Let the Good Times Go
Only if EUR / USD crosses the 100-day SMA level of 1.2052 at the close of the day can the bulls regain control. Alternatively, sellers are looking for a horizontal area around 1.1990, which includes several levels since March 11th.