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MTrading Team • 2023-02-09

EURUSD eyes first daily gains in five amid firmer sentiment, downbeat US Dollar

EURUSD eyes first daily gains in five amid firmer sentiment, downbeat US Dollar

The risk profile improved on Thursday and allowed the markets, as well as the EURUSD pair, to consolidate the previous moves amid sluggish initial hours of trading. 

The re-check of hawkish Fed rhetoric and growth optimism joins China-linked news to underpin the firmer sentiment and weigh on the US Dollar amid softer Treasury bond yields.

It should be observed that Australia’s strong ties with China allowed AUDUSD to lead the G10 currency pair gainers versus the USD. That said, EURUSD also remained firmer despite softer inflation data from Netherlands and Germany.

That said, the market’s optimism allowed gold to print a four-day uptrend but crude oil struggles amid hopes of more output.

It’s worth noting that the BTCUSD and ETHUSD can neither benefit from upbeat sentiment nor the softer US Dollar amid downbeat industry updates.

Following are the latest moves of the key assets:

  • Brent oil struggles to extend three-day uptrend near $85.00.
  • Gold rises for the fourth consecutive day, up 0.40% near $1,882 by the press time.
  • USD Index reverses the previous day’s rebound by dropping back to 103.20.
  • Wall Street closed with losses but the equities in the Asia-Pacific region traded mixed and those in Europe and the UK print mild gains.
  • BTCUSD and ETHUSD both declined for the second consecutive day to $22,700 and $1,630 at the latest.
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Risk-on mood prevails

Although most of the central bankers, apart from Bank of Canada (BoC) Governor Tiff Macklem, renewed hawkish rhetoric, their concerns surrounding the economic growth seemed to have favored the risk profile. Adding strength to the upbeat sentiment could be the headlines suggesting easing US-China tensions and expectations of more stimulus from China. 

On a different page, the uncertainty surrounding the next Bank of Japan (BoJ) leader and his outlook on monetary policy, likely hawkish, seem to help the Japanese Yen (JPY) to benefit. Also favoring the USDJPY pair could be the downbeat US Treasury bond yields.

Furthermore, the EURUSD pair ignores softer inflation numbers from Germany and Netherlands ahead of the key EC economic forecasts, mainly due to the latest chatters signaling no scope for a recession in the old continent.

Gold benefits from China-linked news and a softer US Dollar, as well as broad growth optimism, but Crude oil grinds near the weekly top as US President Biden teases output release.

Elsewhere, headlines suggesting more shutdowns in the crypto front join looming fears of more regulations for Bitcoin and Ethereum to weigh on the BTCUSD and ETHUSD prices even as risks improve and the greenback eases.

  • Strong buy: USDJPY
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Central banks, economic projections in focus

Having witnessed downbeat inflation data from Germany and Netherlands, market players have the quarterly economic forecasts from the European Commission to track for clear directions. Also important is the Bank of England (BoE) Governor Andrew Bailey’s testimony and a few other central bank speakers who can offer intermediate moves ahead of the busy Friday.

May the trading luck be with you!