• EUR/USD failure at 1.1600 threatens to push the single currency to new yearly lows.
  • Risk-on market sentiment weighs on safe-haven currencies, like the US dollar.
  • ECB members coincide with inflation upside pressures as “transitory.”
  • Fed’s Bostic: Inflation appears to be the last longer because of supply chains.
  • Fed’s Daly: Bottlenecks are the leading cause of rising prices.

The EUR/USD slumps during the New York session, trading at 1.1588, down 0.04%  at the time of writing. Earlier in the Asian session, the single currency rose to a fresh weekly high at 1.1624, reclaiming the 1.1600 thresholds. However, as European traders got to their desks, the euro slid aggressively, with sellers pushing the pair beneath the 1.1600 figure. 

Risk-on market sentiment has kept safe-haven currencies like the US dollar downward pressured. Riskier currencies like the AUD, the CAD, and the NZD outperform the greenback. Nevertheless, ongoing central bank divergences between the European Central Bank and a Federal Reserve ready to start the bond taper weigh on the shared currency.

During the European session, some ECB members crossed the wires. Klass Knot said that the inflation outlook for the Eurozone is back on track. In the same tone, Christine Lagarde, President of the European Central Bank, said that they continue to view inflation upswing as being largely driver by temporary factors. 

That said, most ECB policymakers seem to adhere to the “transitory” narrative, contrarily to what Federal Reserve members have been vocal about recently.

Across the pond, on Thursday, Atlanta’s Federal Reserve President Raphael Bostic said that inflation appears to be the last longing because of supply chain and labor shortages. In the same tone, and at the same time, San Francisco President, Mary Duly, said that bottlenecks are the leading cause of rising prices. She added that inflation would subside as the COVID-19 crisis improved.

US Initial Jobless Claims rose to 293K better than the 319K expected

In the European economic docket, there is nothing to report. Concerning the US, the Initial Jobless Claims rose to 293K better than the 319K foreseen by analysts, delivering positive news regarding the labor market. Further, the US Producer Price Index increased by 8.6% less than the 8.7% estimated, while excluding food and energy, expanded 6.8% lower than the 7.1% expected.

KEY ADDITIONAL LEVELS TO WATCH