EUR/USD skates on thin ice below 0.9800 amid sluggish yields, eyes on Fed speakers

• EUR/USD picks up bids to pare intraday losses, braces for the first weekly gain in three.
• Yields dribble around multi-year high as markets wait for fresh clues.
• Last round of Fedspeak before pre-FOMC blackout will be crucial as DXY struggles despite hawkish wagers on Fed.
• Eurozone preliminary Consumer Confidence for October will be important as well.

EUR/USD prints mild intraday losses around 0.9780 despite the recent bounce of the day’s low, which in turn portrays the market’s indecision amid a light calendar day on Friday. Even so, the major currency braces for the first weekly gain in three as the US Dollar Index (DXY) struggles to justify strong Treasury yields and hawkish Fed bets.

DXY prints a three-day uptrend as it pokes 113.00 by the press time, up 0.12% intraday. Even so, the greenback gauge snaps a two-week uptrend while posting 0.30% weekly loss by the press time.

That said, the greenback’s weekly loss could be linked to Monday’s heavy fall while the latest recovery takes clues from the US data and Fedspeak.

US Initial Jobless Claims eased to 214K for the week ended on October 07 versus 230K expected and a revised down 226K prior. Further, Philadelphia Fed Manufacturing Survey Index dropped to -8.7 for October versus the -5 market consensus and -9.9 previous reading. Additionally, US Existing Home Sales rose past 4.7M expected to 4.71M but eased below 4.78M prior. Recently, Federal Reserve Governor Lisa Cook mentioned that ongoing rate increases will be required.

Amid these plays, the US 10-year Treasury bond yields refreshed a 14-year high the previous day, around 4.22% by the press time. Also, the two-year US Treasury yields rose to the highest levels since 2007 before recently taking rounds to 4.62%. It’s worth noting that Wall Street closed in the red following an initially upbeat performance while the S&P 500 Futures extend the previous day’s losses with 0.50% intraday downside at the latest.

Other than the US dollar recovery, the fears of escalating the energy crisis in the bloc also exert downside pressure on the EUR/USD. During the ongoing EU Summit, Germany drops opposition to the bloc’s natural gas price cap and hence Moscow may convey dislike soon.

Considering the aforementioned details, the EUR/USD is likely to remain dicey but the last dose of the Fed speakers’ comments before the blackout period preceding November’s Federal Open Market Committee (FOMC) meeting will be crucial for clear market directions. Also important to watch will be the preliminary readings of October month Eurozone Consumer Confidence, expected -30.00 versus -28.8 prior.

Technical analysis

50-SMA joins an upward-sloping trend line from September 28 to restrict the immediate EUR/USD downside around 0.9760 support, a break of which could quickly drag the quote towards a horizontal area comprising multiple lows marked since September 23, near 0.9680-70.