The EURUSD pair rose 0.04% to 1.2178 on Wednesday, June 9, with the price action climbing to an intraday high of 1.2218. Support came from the EURGBP cross after European Commission Vice-President Maroš Šefčovič said the EU could retaliate by imposing some tariffs on UK goods due to the latter’s foot-dragging on implementation of the Protocol on Ireland/ Northern Ireland.
The euro bulls were unable to gain a foothold above 1.2200, as the 10Y Treasury yield spiked higher. The sharp rebound from 1.471% to 1.506% may have been triggered by expectations surrounding today’s US CPI report. As a result, the price action retraced to 1.2174. Interestingly, the bulls did not react to the repeated decline in US10Y by the close of the session.
Today’s macro agenda (GMT+3):
At the time of writing, the euro was trading at 1.2170. In Asia-Pacific (APAC) trading, the price action dropped to 1.2162. The aussie and kiwi dollars were up 0.13% against the greenback. As usual, upside in antipodeans points to rising risk appetite. Meanwhile, the single currency trickled down 0.06%. Today’s highlights include the ECB meeting, US May CPI, and Christine Lagarde's press conference.
The EU Governing Council is expected to raise its Eurozone inflation projections for full-year 2021 and maintain large-scale stimulus measures. In addition, the regulator is scheduled to hold a three-day meeting starting June 18 in Frankfurt am Main to discuss its future strategy. That event will likely be even more important than today's meeting.
Economists forecast that US consumer price growth accelerated to 4.7% in May from a year ago. In April, consumer prices grew by 4.2%, the hottest print since 2008. As we know, the Fed has previously stated that inflationary pressures are transitory as the economy continues its recovery from the Covid-19 pandemic.
We strongly advise FX players to keep a close eye on the 10Y Treasury yield after the CPI report comes out. A rise in the yield will put pressure on the euro. If the headline figure matches the 4.7% forecast or comes in below that number, we can expect the euro to recover. Aside from that, the other wildcard is what Lagarde will have to say at the post-meeting press conference and what questions journalists will ask her at 12:30 GMT.