EUR/USD slides below 1.0200 as ECBspeak traces Fed Minutes to highlight recession woes

• EUR/USD takes offers to refresh intraday low, snaps two-day rebound.
• ECB’s Schnabel, Kazaks signal economic woes in the bloc but back the central bank’s current monetary policy.
• Fed Minutes raised economic concerns and signaled the policymakers’ readiness to go slow on rate hikes before long.
• Final versus Eurozone inflation, second-tier US data can entertain traders.

EUR/USD bears attack the short-term support line as policymakers from the European Central Bank (ECB) follow their US counterpart to highlight recession woes. Also exerting downside pressure on the major currency pair could be the risk-averse catalysts from China, That said, the quote drops to 1.0160 while snapping a two-day uptrend during Thursday’s initial European morning.

ECB executive board member Isabel Schnabel said on Thursday, "Recession on its own would not be enough to control inflation." The policymaker also backed the regional central bank’s current policies. Following that, ECB Governing Council member Martins Kazaks said in an interview with Latvia’s TV3 on Thursday, “the ECB will continue to hike interest rates to tame inflation,” per Bloomberg.

On the other hand, the Minutes of the latest Federal Open Market Committee (FOMC) showed, per Reuters, that officials were ready to slow the pace of interest rate hikes in tandem with signals of a slowdown in inflation. The news also added, “In their July meeting minutes released on Wednesday, Fed officials said the pace of future rate hikes would depend on incoming economic data, as well as assessments of how the economy was adapting to the higher rates already approved.”

After the Fed Minutes’ release, the US 10-year Treasury yields retreated from the weekly top surrounding 2.90%, down two basis points (bp) to 2.89% by the press time. That said, Wall Street registered losses and weighed down the stocks in Asia-Pacific, as well as the stock futures of late.

Elsewhere, concerns surrounding China, as well as the chatters that the dragon nation braces for more stimulus, seem to underpin the US dollar’s demand. Goldman Sachs and Nomura both cut Beijing’s growth forecasts after witnessing the latest jump in the covid numbers. Also negatively impacting the Chinese economy are the doubts over the People’s Bank of China’s (PBOC) capacity to tame recession woes, as conveyed by Reuters. Additionally, comments from the US Trade Representative’s office stating, “Early this autumn, the US and Taiwan will begin formal negotiations on a trade initiative,” seem to renew the fears of the US-China tussle and also roil the mood.

Looking forward, the final readings of the Eurozone inflation gauge for July, namely the HICP, likely to confirm the 8.9%, could offer immediate directions. Following that, weekly prints of the US Initial Jobless Claims and Philadelphia Fed Manufacturing Survey for August should entertain EUR/USD traders.

Technical analysis

An impending bear cross on the MACD, as well as the 21-DMA surrounding 1.0210 questions the major currency pair’s immediate upside. Alternatively, pullback moves need to break the support line from July 27, close to 1.0165 at the latest, to convince the EUR/USD bears.