The EUR/USD pair struggles in the market while traders get ready for the week in the early hours of Monday as the market opens in Europe. Even at that, the pair is still down for the second day in a row as the market watches out for the Federal Open Market Committee’s meeting memorandum. They are also watching out for any report around the possibility of a recession in the Eurozone.
US Dollar Index Pulls Back to Favor the Pair
The latest recovery the quote has seen can be connected with the US Dollar index’s pullback from its intraday height. The Dollar index eased just recently from the height it has been after news emerged that Russian bonds are about to resume trading on Wall Street. Another factor that favors the market’s careful optimism is the news that there are improved COVID conditions in the Chinese city of Shanghai.
EUR/USD price chart. Source TradingView
But the palpable fears that surround the possibility of a recession in Europe, as exemplified by the energy crisis in Germany, posed a challenge to the market’s mood. Several statements from US Federal Reserve top officials also added to drowning the mood, in spite of the reduced inflation reading recently recorded.
The President of Richmond’s Federal Reserve, Thomas Barkin, announced on Friday that he plans to increase rates further to curb inflation. He said he would like to experience a sustained period of inflation under control. Until that happens, he said, they might have to keep moving rates.
Amplified Energy Crisis
Barkin’s comment came after strong Michigan CSI for the month of August rose higher to 55.1 from the July figure of 51.5 and the market’s expectation of 52.5. More details show that the inflation expectation dropped to the six-month low expectation of 5.0% from the height of 5.2%. But, the five-year inflation perspective increased by about 3.0% from the last reading of 2.9%.
The Chairman of the Bundesnetzagentur, Klaus Mueller, spoke with the Financial Times in an interview. He said Germany achieved its 75 % objective two weeks earlier than expected. High prices and other saving measures were used to cut down energy and gas usage.
Mueller said the other two stages that are left to be achieved are very ambitious. Note that the mixed news coming from the tussles between the US and China, as well as the proposed meeting between Biden and Xi, keeps a peg on the EUR/USD price.