EURO FACES SOME HEADWINDS NEAR 1.0860, LOOKS AT GERMAN CPI, US DOCKET

The Euro comes under pressure and recedes to 1.0880 vs. the US Dollar.

Stocks in Europe opened Wednesday’s session on a mixed note.

EUR/USD has left behind two consecutive daily gains so far on Wednesday.

The USD Index (DXY) bounces off lows and climbs to 103.60.

US and German yields attempt a mild rebound early in Europe.

Inflation in Spain picked up pace in August at 2.6% YoY.

The Euro (EUR) is now losing some upside momentum vs. the US Dollar (USD), forcing EUR/USD to retreat to the 1.0860 region after Tuesday’s multi-day peaks, just pips away from 1.0900 the figure.

On the flip side, the Greenback manages to regain the smile and leaves behind part of the data-led sharp pullback seen in the previous session, lifting the USD Index (DXY) back to the 103.60 zone following the opening bell in the old continent midweek and amidst a mild bounce in US yields across different maturities.

In the meantime, the Federal Reserve’s (Fed) tighter-for-longer approach now appears somewhat dented in response to recent data releases, which also pour cold water over expectations of a 25 bps rate hike at the November 1 gathering.

By contrast, there is no news around the European Central Bank (ECB) regarding its potential decision on rates once the summer season is over.  

Data-wise in the region, flash inflation figures in Spain see the CPI rising 2.6% in the year to August, while Consumer Confidence in Italy receded a tad to 106.5 for the current month. Later in the session, the final Consumer Confidence in the broader euro area is due along with advanced inflation figures in Germany.

In the US, investors’ attention will be on the release of the ADP report, followed by another estimate of the Q2 GDP Growth Rate, Pending Home Sales and flash Goods Trade Balance figures.

Daily digest market movers: Euro meets some resistance ahead of 1.0900

The EUR gives away part of the recent gains vs. the USD.

German and US bond yields pick up some renewed traction.

Market participants will now shift their focus to the ADP results.

JOLTs Job Openings dropped to the lowest level since March 2021 in July.

The Fed's'sighter-for-longer narrative seems to be losing momentum.

Investors now see the Fed on hold for the remainder of the year.

Further stimulus measures are likely to be taken by the PBoC in the near term.

BoJ’s Tamura favoured the current loose monetary conditions