EUR/USD stays firmer as traders await EU inflation, Fed Chairman Powell

Financial markets extend the previous day’s optimism as China-linked headlines joined the month-end consolidation and cautious mood ahead of top-tier catalysts. 

The US dollar remains pressured while tracking downbeat Treasury yields whereas prices of commodities increased. Antipodeans cheered softer USD while ignoring downbeat data from New Zealand, Australia and China.

Gold braces for the first monthly gains in nine whereas Brent oil pare monthly losses with mild recovery.

NZDUSD leads the major currency pairs benefiting from the softer USD whereas USDCNY occupied the other end amid optimism surrounding Beijing.

Further, BTCUSD and ETHUSD remain firmer for the second consecutive day, refreshing the highest levels in two weeks.

Following are the latest moves of the key assets:

• Brent oil prints mild gains around $86.00 while keeping the previous day’s rebound.
• Gold prints 0.30% intraday upside as bulls poke the $1,755 level.
• USD Index prints the first daily loss in four, down 0.20% intraday near 106.60.
• Wall Street closed mixed but equities in the UK and Europe begins the key day on a firmer footing.
• BTCUSD stays firmer near the highest levels in two weeks whereas ETHUSD rises nearly 5.0% intraday as bulls attack $1,275.

Traders prepare for a volatile session

China’s second day of softer covid numbers, after witnessing all-time highs, allowed the policymakers to ease some of the virus-led activity restrictions in some industry-pro cities. The same propelled the risk-on mood earlier on Wednesday even as the pre-data/event caution challenged the optimism. Also on the positive side could be the disappointing China PMIs, suggesting higher stimulus on the way. 

On the same line, downbeat Australian inflation backed the RBA’s bearish bias and allowed AUDUSD to remain firmer while the NZDUSD cheered a slump in Building Permits as RBNZ hawks stay on the table.

Elsewhere, the US Dollar bears the burden of recently downbeat data even as the Fed policymakers tried to defend the rate hikes.

Gold benefits from softer USD and upbeat headlines from China, which also favored Brent oil amid expectations of an OPEC+ output cut.

Cryptocurrencies remain on the way to monthly loss despite a recent rebound as traders seem to lose faith in the once-favored investment options after the latest FTX fiasco.

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

Powell plays the key role, EU inflation may disappoint the ECB hawks

Although a slew of data from the US and Europe are likely to entertain the market players moving forward, major attention will be given to how Fed Chairman Powell defends the rate hike trajectory while also signaling softer rate lifts ahead. Also important will be the Eurozone inflation data amid expectations of witnessing downbeat figures. Furthermore, US ADP Employment Change, GDP and other data can also keep traders busy during the day.

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