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Euro Forex Market Hits Monthly High as Yields Drop

  • Selling Pressure Finally on US Dollar with Disappointing Data
  • Attentions Move to Fed Speeches
  • Wall Street Looks to Embrace Risk-On Mood

The Dollar forex market has continued to move from strength the strength over recent weeks. This has been highlighted through annual highs for both the currency itself and the US Dollar Index which measures relative strength against other major currencies. The pressure finally came upon the Dollar though as poor industrial figures dragged treasury yields down and along with that the US Dollar. The focus will now move to Fed speeches for reaction through the day as Wall Street hopes to carry on a generally positive start to the week. 

Dip in Yields Hurts Dollar 

The main driver behind the fall in the USD within the last 24-hours has been the drop in treasury yields. This is particularly the case with the 10-year yield which many trading forex tend to focus on. This has shown a significant fallback of more than 1% from recent levels. Accompanied by a move below 94 from the US Dollar Index, it has sparked selling pressure in the Greenback with the currency reaching its lowest point of the month against the Euro and Pound. 

Both of these major currencies meanwhile will be grateful for the respite. The Euro had been penned below 1.16 for quite some time though it now moves above 1.165 ahead of speeches later in the day from the ECB who remain less hawkish than their British counterparts on the state of economic support moving forward. Sterling meanwhile has moved close to 1.38. 

Fed and ECB Stance Critical to Next Move

Forex brokers are not alone in noting that the next important movement of the day, and week will likely be made following today’s speeches from various Fed policymakers and those at the ECB. On the US side, the Fed had generally been moving toward a more hawkish approach with talk of tapering rampant in recent weeks. 

It remains to be seen how the disappointing industrial figures and declining yields will impact these calls, though many analysts expect they will soften for now. Expect though that any more positive data releases could reignite the inflation debate and further calls for tightening. The ECB is expected to retain their more fluid, flexible approach which has served them to this point. 

Stocks Quiet Ahead of Earnings

Markets on Wall Street began the week on a largely positive note. This is something they will be eager to continue as we move into a huge day for earnings reports on the street. To date, expectations have largely been surpassing what experts had expected. Netflix, P&G, and United Airlines are a few of the names set to report today. 

Prices have been trading slightly higher across the board in the early hours, possibly buoyed by the easing Treasury yield and data pointing toward a more risk-on approach. There is still a general concern though that stocks could suffer eventually as a result of the relaxed fiscal approach since the pandemic.  

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