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The EUR/USD pair recovers on Monday despite Monday’s higher Treasury bond yields. It had fallen over the previous two days. The risk-on impulse of Monday supported the Euro at the expense of the US Dollar.
The EUR/USD pair hit a daily low of 1.0744 during a quiet trading day in the US, but has since ended two days of losses and is presently rising.
Notwithstanding high US Treasury bond yields, more risk taking and a weaker US dollar allowed the Euro to rise even further. At the time of writing, the EUR/USD is trading at 1.0793 above its opening price.
The Dow Jones and the S&P 500 are increasing, while the Nasdaq is falling, in the US equities markets. As US regulators are thinking about extending emergency lending capabilities to First Republic Bank, market investors applauded First Citizens BancShare’s acquisition of Silicon Valley Bank (SVB).
The March US Dallas Fed Manufacturing Index fell -15.7, higher than the -13.5 decline in February and worse than the -10.9 expectation. Examining the information, we see that both the Employment component and the Production Index increased. As the number of new orders decreased, the price index decreased from 15.5 to 7.0.
US Treasury bond yields increased, with 2s bouncing about 4% and the benchmark 10-year note rate rising thirteen basis points to 3.515%. The US Dollar Index (DXY), which is down 0.19% at 102.915, indicates that the US dollar has not profited from the increase in US bond yields.
ECB speakers are cutting through the noise on the front of the Eurozone. Nagel highlighted that the path towards monetary policy normalization would continue even if he acknowledged the growing significance of approaching meetings one at a time. QT would soon accelerate, he added. On the other hand, because of the high level of uncertainty in the financial markets, ECB’s de Cos adopted a cautious stance.
Of late, ECB’s board member Isabel Schnabel commented that she wanted to signal that further rate hikes were possible, according to people who know the matter.
Technically; the EUR/USD is neutral to upwardly biassed, and as long as it is above 1.0759, a triple bottom will continue to be valid. Oscillators are sending conflicting messages. While the Rate of Chance (RoC) indicates that purchasing pressure is fading, the Relative Strength Index (RSI) favours EUR/USD price growth. The initial resistance level for the EUR/USD would consequently be 1.0800 if the direction of least resistance is higher. The ceiling for the EUR/USD would be 1.0929 when it is breached, then 1.1000.
