The appreciative move in the Europe made the EUR/USD bullish on Today market session. The pair recovered from the low which is made on Friday post-Nonfarm Payroll (NFP) data. The US Dollar Index (DXY) follows the treasury yields and retreats from the monthly high. Mixed US economic data dropped the green back. NFP data came in at 850K, beating market expectations at 700K. The rate hike from the central bank revealed data expectations sooner than expected from the Fed. The unemployment rate rose slightly to 5.9%. U.S. factory orders rose 1.7% in May, slightly above market expectations.
Rising inflation in Europe will not be temporary, Dutch central bank chairman Klaas Knot said in an interview with NRC Handelsblad on Sunday. Knot who is known as one of the worst members of the European Central Bank’s board of directors, said “inflation is not dead.” “We should not overestimate the ability to determine what temporary inflation is and what is not,” he said.
The ECB has forecast 1.9% inflation this year as it is considered a temporary factor among the recovery after the corona virus infection. By 2022, the bank predicts that inflation will fall to 1.5%. Its long-term inflation target is near, but slightly below 2%. If this is achieved in the medium term, Knot said in the paper, “Let’s see if we can tighten the (monetary policy) straps as we have been able to untie them for the last 10 years.” The World Health Organization (WHO) has warned that there will be a third corona virus wave in Europe as cases increase after 10 weeks of decline.
The minutes of the June meeting are due to be released on Wednesday, which may shed some light on the policymaker’s insights into the economic and inflation outlook. U.S. dollar gains in anticipation of the Hawkish Fed view. For now, traders are waiting to know the German Markit Index (PMI) data, Eurozone PMI data to gauge the market sentiment.
EUR/USD 4 Hour Chart:
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