EURUSD grinds lower towards 1.0300 amid recession fears, hawkish Fedspeak ahead of Eurozone GDP

• EURUSD holds lower ground after reversing from three-month high.
• Fed policymakers renew inflation woes, underpin rebound in US Treasury yields.
• Fears of economic contraction in the bloc, China’s covid woes add strength to the bearish bias.
• Second estimate of Eurozone Q3 GDP, US PPI for October will decorate calendar.

EURUSD portrays the pre-data anxiety as it gradually extends the week-start pullback from the multi-day high, down 0.07% intraday near 1.0325 during early Tuesday morning in Europe. It should also be noted that the mixed concerns surrounding the US Federal Reserve (Fed) and the European Central Bank’s (ECB) next moves also restrict the quote’s immediate moves. Even so, recovery in the US Treasury yields appears to defend the pair sellers ahead of the second estimate of the Eurozone Gross Domestic Product (GDP) for the third quarter (Q3).

Recently, the Fed’s Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, Michael Barr mentioned that the inflation is too high. Before that, Vice-Chair Lael Brainard favored a 50 bps rate hike but also stated, “We have additional work to do.” Earlier on Monday, Federal Reserve Governor Christopher Waller also promoted the ideal of a 0.50% rate hike while also warning against the market’s perception of the pivot.

On the other hand, ECB executive board member Fabio Panetta said on Monday that the monetary policy has to continue to tighten to ensure that inflation in the Eurozone does not become entrenched, as reported by Reuters.

It’s worth noting that the chatters surrounding the price cap on Russian energy products and the Sino-American tension, as well as China’s Covid woes, are some additional hurdles that challenge the markets’ sentiment and weigh on the EURUSD price.

Amid these plays, S&P 500 Futures print mild gains but the US 10-year Treasury yields grind higher around 3.87%, which in turn underpins the US Dollar Index (DXY) recovery, up 0.08% intraday near 107.00 by the press time.

Moving on, the Eurozone GDP is likely to confirm the initial forecasts of 0.2% QoQ and may not help the EURUSD buyers to return. On the contrary, a downbeat print, which is more likely, could please the pair sellers. Even so, the US Producer Price Index (PPI) for October, expected at 8.3% YoY versus 8.5% prior, as well as the US Retail Sales for the said month should have waited for clear directions.

Technical analysis

Monday’s “hanging man” bearish candlestick joins overbought RSI conditions to keep the EURUSD bears hopeful unless the quote crosses the 200-DMA hurdle, currently around 1.0430.