Risk sentiment remains unstable and vulnerable, suggesting the dollar could yet attract more robust demand
Global stocks rebounded on Wednesday as inflation worries have abated somewhat, pushing bond yields lower. As such, the dollar failed to challenge the 103.00 resistance and finished lower overnight. Still, the USD index regained some bullish bias today as dip buyers reemerged to bring the buck back above 102.50 in early European session.
The EURUSD pair is now back below 1.0700 while holding above yesterday’s lows seen around 1.0650. The data earlier in the day showed that industrial production in Germany rebounded by 0.7% month-over-month in April versus +1.0% expected and -3.7% last. The shared currency stayed on the defensive following the report, as the overall USD direction continues to set the tone in the market.
In general, currencies remain quiet ahead of major events including the ECB meeting and S inflation data. The greenback regained the upside momentum as the yield on 10-year US Treasuries reclaimed the 3% figure early on Wednesday. On the other hand, positive risk sentiment seems to be capping gains for the safe-haven dollar at this stage.
Elsewhere, gold prices struggle for direction while staying above both the 20- and 100-DMAs. The precious metal has settled around $1,850 on Wednesday, staying mostly on the defensive since last week’s rejection from a local high of $1,874. In the immediate term, the bullion needs to overcome the $1,855 zone in order to stay afloat and retarget the $1,900 psychological level eventually.
After solid gains on Tuesday, US stock market futures are slightly down early today while European equities opened slightly higher. Risk sentiment remains unstable and vulnerable, suggesting the dollar could yet attract more robust demand this week that concludes with the US CPI data that could have a decent impact on short-term dynamics in USD pairs across the market.