Investing.com — Sterling traded slightly higher on Thursday while the euro was broadly steady against the U.S. dollar, as a pullback in U.S. technology stocks and declining Treasury yields prompted investors to trim long dollar positions ahead of upcoming economic data.
Sterling was up 0.10% at $1.3406, while the euro edged 0.02% higher to $1.1235, as of 05:17 ET (09:17 GMT).
The U.S. dollar faced modest downward pressure as global investors scaled back exposure to crowded U.S. tech plays, driving a minor defensive rotation into European currencies.
“The biggest market driver at the moment is the heavy and concentrated positioning in U.S. tech and the dollar, which is being gently pared back,” said Chris Turner, Global Head of Markets at ING.
“Until the rock-solid short end of the U.S. yield curve starts to buckle, it is hard to make the case that the dollar needs to fall across the board.”
Federal Reserve Chair Kevin Warsh last week signaled that price stability remains key but refrained from offering explicit rate guidance ahead of the Fed’s Oct. 27-28 meeting.
Markets generally expect the Fed to keep interest rates unchanged this month, with traders looking to Friday’s flash U.S. PMI figures and initial jobless claims for further catalysts.
Sterling’s modest gain was primarily a reflection of broader dollar softness rather than UK-specific fundamentals, though persistent UK inflation data from Wednesday continues to support expectations for a Bank of England rate hike in November.
Domestic political attention remains focused on next week’s upcoming fiscal budget.
Meanwhile, the euro found minor relief despite ongoing fiscal uncertainty in France and elevated energy costs.
European Central Bank officials remain quiet ahead of their Oct. 29 policy meeting, where rates are widely expected to stay on hold.
ING expects EUR/USD to remain capped, noting that a break above technical resistance at $1.1270/75 would be required to open the door toward $1.1340/50 over a one-month horizon.
ING maintains a one-month EUR/USD target of $1.1300, stating that a significant dovish repricing at the short end of the U.S. curve or a broader collapse in U.S. tech valuations would be required to trigger a sustained dollar correction.
Original Article
Sterling today: Pound edges higher on U.S. tech drag
Yen surges to 3-week high as dollar wobbles ahead of c.bank meetings
French yields breach 5% amid Paris budget paralysis and nationwide unrest
