Negative shift in risk mood keeps EUR/USD on the back foot
EUR/USD remains in negative territory below 1.0950 on Tuesday as the market mood turns sour. The absence of high-tier data releases and a firm US Dollar prevent the pair from gaining traction.
EURUSD Daily Chart
Limited range trading as market awaits US inflation data
The EUR/USD pair trades with a soft tone, hovering around 1.0930, as market participants await fresh inflation data from the United States. Investors are closely watching the upcoming December Consumer Price Index (CPI) release, which is expected to be at 3.2% year-on-year. There is speculation that the Federal Reserve (Fed) may consider a rate cut as early as March, depending on the data.
US Dollar benefits from higher US Treasury yields
Firmer US Treasury yields contribute to the strength of the US Dollar. The 10-year note offers 4.04%, up 4 basis points (bps), while the 2-year note yields 4.38%. In contrast, stock markets trade with a sour tone, with European indexes in the red and dragging US futures lower.
Mixed data from Europe and positive US figures
German Industrial Production fell by 0.7% month-on-month in November, worse than anticipated. On the other hand, the Eurozone Unemployment Rate contracted to 6.4%. In the US, the NFIB Business Optimism Index increased in December to 91.9, surpassing expectations. Later, the country will release the November Goods and Services Trade Balance and January TIPP Economic Optimism.
GBP/USD retreats toward 1.2700 as US Dollar rebounds
GBPUSD Daily Chart
Renewed US Dollar strength pushes GBP/USD lower
Following a quiet Asian session, GBP/USD starts to edge lower toward 1.2700 on Tuesday due to renewed US Dollar strength. The risk-averse market atmosphere ahead of key data releases makes it challenging for the pair to hold its ground.
Positive outlook if support at 1.2750 holds
After briefly dipping below 1.2700, GBP/USD reverses its direction and closes the first trading day of the week in positive territory near 1.2750. The near-term technical outlook suggests that the pair could continue to edge higher once 1.2750 is confirmed as support.
Optimism about US government avoiding shutdown supports GBP/USD
Growing optimism about the US government avoiding a shutdown after the leaders of the House and Senate agreed on a $1.59 trillion spending deal late Sunday helps GBP/USD gain traction in the second half of Monday. This positive sentiment gives bullish momentum to US stocks at the start of the week.
US Treasury bond yields edge lower, Bitcoin Spot ETF competition heats up
US Treasury bond yields see a decrease, and the US Dollar struggles to attract buyers. The year-ahead inflation expectation drops to its lowest level since January 2021 at 3%. In the Bitcoin Spot ETF race, Bitwise Invest offers the lowest fee at 0.24%, while GrayScale plans to charge the highest fee at 1.5%.
SEC likely to delay decision on Bitcoin Spot ETFs
Market participants anticipate the US Securities and Exchange Commission (SEC) to approve one or more spot Bitcoin ETF applications by the January 10 deadline. However, the founder of the Chamber of Digital Commerce suggests that the regulator is likely to delay the decision on these securities products. BlackRock, the largest asset management firm globally, re-files their S-1 form based on comments from the SEC.
Bitcoin price climbs amid anticipation of SEC’s decision
With the deadline for the SEC’s decision on Spot Bitcoin ETFs approaching, Bitcoin’s price reaches $47,200 on Monday. While most experts believe that the approval is already priced in, BTC price climbs nearly 6% in the past week. Bitcoin sustains above $42,000 and aims for the psychologically important level of $50,000, last seen in December 2021. Resistance may be encountered at $48,600, which represents the 61.8% Fibonacci retracement level of the decline from November 2021 to 2022.
BTCUSD Daily Chart