EUR/USD defends 1.1300 as US dollar resists tracking firmer yields

US Treasury yields keep Fed hawks hopeful ahead of next week’s FOMC, underpinning USD.German inflation data, US housing numbers will decorate calendar but bond moves, risk catalysts are the key for fresh impulse.licks its wounds past 1.1300 after strong US Treasury yields caused the heaviest daily fall in a fortnight. That said, the major currency pair gains 0.10% intraday near 1.1330, rising for the first time in four days by the press time of the pre-European session on Wednesday.

The latest corrective pullback could be linked to the US dollar’s hesitance to track the firmer Treasury at a multi-month high. refreshes intraday low near 95.70 while easing from the weekly top. On the other hand, the US 10-year Treasury yields added 1.5 basis points to 1.88% after refreshing the two-year top to 1.89% during the early Asian session.

The NY Empire State Manufacturing Index slumped to negative for the first time in two years in December, -0.7 versus 25.7 expected and 31.9 prior, whereas US NAHB Housing Market Index eased to 83 versus 84 market forecasts and previous readouts. On the other hand, France's central bank head and ECB governing council member François Villeroy de Galhau reiterated on Tuesday that French inflation is likely to fall back under 2.0% by the end of 2022. However, should inflationary pressures prove more persistent, he added, he has no doubt that the ECB would adapt its monetary policy faster.

While reacting to the aforementioned catalysts, EUR/USD pays a little heed to Reuters poll stating, “Eurozone inflation is set to burn hotter throughout 2022 than expected a month ago, which could pressure the European Central Bank to tighten policy once the Omicron wave of the pandemic passes.”

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