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Rising US Treasury bond yields and anticipation of further Fed tightening weigh heavily on the EUR/USD pair, which declines to 1.0500, down 0.69%. The Euro is losing value due to divergent economic forecasts that show growing US business activity and slowing manufacturing activity in the Eurozone.
With major support at 1.0500 and probable further losses towards 1.0290 and 1.0222 if drops continue, the EUR/USD is bearishly skewed. After reaching a daily high of 1.0592 but failing to break above the 1.0600 barrier, the Euro lost ground against the US Dollar in early morning trading during the US session, which accelerated its decline as the EUR/USD moved closer to the 1.0400 level for the third time in the previous two weeks.
The major is currently trading at 1.0495, down 0.77%. Stronger US economic data, rising US Treasury yields, and a hawkish Fed overshadow weaker Eurozone factory activity, which is why the euro suffers against the US dollar.
The mood of market participants is still uneasy, with US stocks falling except for the Nasdaq 100. Business activity is rising, according to two analyses from S&P Global and the Institute for Supply Management (ISM), which were released in conjunction with the most recent round of US economic data.
The ISM Manufacturing PMI, which economists most frequently look for, improved from 47.9 to 49.8, surpassing expectations of 47.8, while the S&P Global Manufacturing PMI increased by 49.8, above the 48 predicted for September.
Meanwhile, the most recent Federal Reserve (Fed) officials to make newswire appearances continue to be hawkish, lead by Michelle Bowman, who said that inflation is out of control and that the current increase in oil prices could undo “some of the recent progress on lowering inflation.” In a subsequent meeting, Bowman stated that she would like another walk.
The ISM Manufacturing PMI, which economists most frequently look for, improved from 47.9 to 49.8, surpassing expectations of 47.8, while the S&P Global Manufacturing PMI increased by 49.8, above the 48 predicted for September.
Meanwhile, the most recent Federal Reserve (Fed) officials to make newswire appearances continue to be hawkish, lead by Michelle Bowman, who said that inflation is out of control and that the current increase in oil prices could undo “some of the recent progress on lowering inflation.” In a subsequent meeting, Bowman stated that she would like another walk.
The 10-year benchmark note yield, which is currently at 4.693%, illustrates how the EUR/USD exchange rate kept falling rapidly when US Treasury bond yields increased by more than 10 basis points. Even if it is rising, the 10-year German bund yield, now at 2.918%, is still high when compared to the US rate.
Further declines in the major could be caused by anticipation for more Fed tightening while the European Central Bank (ECB) is expected to stop its tightening cycle.
