EUR/USD RETREATS TO 1.1550 AREA AS USD HOLDS FIRM ON RISING T-BOND YIELDS

• EUR/USD started to edge lower after touching a daily high above 1.1570.
• 10-year US T-bond yield is rising nearly 2% on Thursday.
• ECB downplayed inflation concerns in its September Meeting Accounts.

Supported by risk flows, the EUR/USD pair gained traction during the European trading hours. After touching a fresh daily high of 1.1573, however, the pair started to inch lower and was last seen trading flat on the day at 1.1554.

DXY EDGES HIGHER ON RISING T-BOND YIELDS

Easing concerns over energy inflation and positive developments toward a temporary solution to the US debt crisis provided a boost risk sentiment and the shared currency managed to find demand on Thursday. However, rising US Treasury bond yields allowed the greenback to limit its losses and force EUR/USD to pare its daily gains.

Currently, the benchmark 10-year US Treasury bond yield is up 1.9% at 1.552% and the US Dollar Index (DXY) is unchanged on the day at 94.23.

Earlier in the day, the European Central Bank’s (ECB) Meeting Accounts revealed that policymakers didn’t see the near-term increase in inflation as a factor that would force them to start tightening the policy. Although the initial reaction to the ECB’s publication was largely muted, the ECB’s dovish stance could be making it difficult for the euro to attract investors.

On the other hand, the data from the US showed that there were 326,000 Initial Jobless Claims in the week ending October 2, compared to the market expectation of 350,000. There won’t be any other high-tier data releases from the US in the remainder of the day and EUR/USD’s action is likely to remain choppy ahead of Friday’s Nonfarm Payrolls report.