EUR/USD remains pressured below 1.1650 amid USD rebound, German inflation eyed
- EUR/USD starts the Wednesday's session on a muted note.
- US Dollar Index pares its initial losses to trade near 94.00 amid firmer US yields.
- Dovish ECB, Fed tapering, and US economic revival package back the euro underperformance.
The EUR/USD pair remains subdued in the Asian session on Wednesday. The pair stays in a narrow trade band of less than 10-pips movement. At the time of writing, EUR/USD is trading at 1.1632, down 0.02% for the day.
The greenback rises near 94.00, tracking higher US 10-year benchmark Treasury yields. Fed’s tapering expectations amid higher inflationary pressure despite weaker data kept US T-yields rolling at 1.66%, best since May. Higher corporate earnings also lifted the sentiment.
Investors are bracing up for the Fed’s tapering as soon as November whereas the European Central Bank's (ECB) dovish stance weighs on the shared currency. In addition to that, US President and the Democratic remained on track to agree upon a deal on the scope of their cornerstone economic revival package and hope to finalise a compromise in the week later.
The European Central Bank (ECB) President Christine Lagarde said that the central bank will continue to aid the eurozone economy as the fallout from the pandemic lingers, adding to her previous comments on the inflation as “ largely transitory”. In addition to that, ECB Governing Council member and Bank of France Governor Francois Villeroy remained pessimistic over the interest rate hikes by the end of 2022 as the eurozone inflation is expected to fall back below the ECB’s 2% target.
As for now, traders are waiting for the German Inflation Rate, Eurozone Consumer Price Index (CPI), ECB Elderson’s speech, and US Fed’s Quarles speech to take fresh trading impetus.