EUR/USD eyes fresh multi-year low under 0.9900 as Fed hawks propel DXY ahead of US NFP

• EUR/USD remains pressured towards nearly two-decade low marked the last week.
• Yields propel DXY towards refreshing close to 20-year high but ECB hawks seem to test pair bears.
• Stimulus news from Germany, light calendar adds filters to downside move.
• Light calendar, UK holiday could restrict intraday losses even as bulls are stopped.

EUR/USD takes offers to refresh intraday low around 0.9925 during early Monday morning in Europe. In doing so, the major currency pair respects the broadly firmer US Dollar Index (DXY) amid hawkish calls surrounding the US Federal Reserve (Fed) during a quiet session.

US Dollar Index (DXY) rises to the fresh high since September 2002, up 0.50% near 109.35, as the US Treasury yields rally after Fed Chairman Jerome Powell poured cold water on the market’s expectations of sounding cautious at the annual Jackson Hole Symposium.

Not only Fed Chair Powell’s ‘forceful’ defense of the aggressive monetary policy but fears of recession and the Sino-American tussles also underpinned the US dollar’s safe-haven demand. That said, Beijing and Washington recently jostled over the US vessels in Taiwan Strait.

Elsewhere, the escalating energy crisis in the Eurozone and doubts raised about the global central banks’ ability to overcome recession woes, as presented by the study at the Jackson Hole, highlight the risk-off mood.

While portraying the mood, the US 10-year Treasury yields rise nine basis points (bps) to 3.123% at the latest whereas the S&P 500 Futures drop 0.80% intraday while tracing Friday’s downbeat Wall Street performance.

Alternatively, the news that Germany’s ruling party Social Democrats (SPD) will propose further measures to help ease the impact of rising energy prices on citizens, per Reuters, seems to challenge the EUR/USD bears. On the same line were the hawkish comments from the European Central Bank (ECB) policymakers at the Jackson Hole. Among them were ECB board member Isabel Schnabel, French Central Bank chief Francois Villeroy de Galhau and Latvian central bank Governor Martins Kazaks who all argued for forceful or significant policy action, per Reuters.

Looking forward, EUR/USD traders will pay attention to the US Treasury yields and the DXY moves for fresh impulse amid a light calendar at home, as well as a holiday in the UK. However, Fedspeak and chatters surrounding recession, as well as the energy crisis could keep EUR/USD bears hopeful ahead of Friday’s US jobs report for August.

Technical analysis

Unless breaking the 10-DMA surrounding the 1.0000 threshold, EUR/USD bulls should remain away. On the contrary, the downside move needs validation from 0.9900, a break of which could direct bears towards the 61.8% Fibonacci Expansion (FE) of May-August moves, near 0.9840.