EUR/USD extends its upside above 1.0700, focus on the Eurozone GDP, US CPI data

• EUR/USD trades in positive territory for the third consecutive day on the lower Treasury bond yields.
• European Central Bank (ECB) Vice President Luis de Guindos said Eurozone economic growth will remain weak in the near term.
• Fed Chair Jerome Powell reiterated that the Fed will hike rates again if deemed necessary to bring inflation to the 2% target.
• Investors will closely watch the Eurozone growth numbers, and US inflation data on Tuesday.

The EUR/USD pair climbs to 1.0700 during the early Asian session on Tuesday. The lower US Treasury bond yields weigh on the US Dollar (USD) and lend some support to the pair. However, the fear of recession in the Eurozone might capped the upside of the Euro. The major pair currently trades around 1.0700, up 0.01% on the day.

The European Central Bank (ECB) Vice President Luis de Guindos said that Eurozone economic growth will remain weak in the near term. He further stated that there are signs that the labor market is beginning to weaken. However, it will be in a better position to reassess the inflation outlook and required action in the December meeting. ECB President Christine Lagarde highlighted that inflation remained too high and central bank should bring inflation down to its target while maintaining the current restrictive stance for a longer period.

Market players await the Eurozone Gross Domestic Product (GDP) for the third quarter (Q3). The quarterly growth number is expected to contract by 0.1% while the annual number is forecasted to grow by 0.1%. If the GDP data showed weaker-than-expected results, this could exert some selling pressure on the EUR.

On the USD’s front, the New York Fed’s 1-year and 5-year inflation outlook eased to 3.57% and 2.72%, respectively. The Federal Reserve (Fed) keeps track of inflation expectations data as the policymakers believe that the expected direction of price pressures has a significant impact on where inflation stands now. Fed Chair Jerome Powell reiterated that the Fed will hike rates again if deemed necessary to control inflation. However, Fed tightening expectations remain subdued, as the CME FedWatch Tools shows 11.8% odds of a hike on December 13

Later on Tuesday, Eurostat will release the Eurozone employment, growth data, and ZEW survey. On the US docket, the US Consumer Price Index (CPI) will be due. Traders will take cues from these figures and find a trading opportunity around the EUR/USD pair.