EUR firmer on rising domestic yields – Scotiabank

FXStreet Insights Team FXStreet

The EUR has found a solid bid on the back of rising long-term yields as investors consider the potential for heftier government borrowing in Europe to bolster defence spending, Scotiabank's Chief FX Strategist Shaun Osborne notes.

EUR still trades well below FV

"The EUR has found a solid bid on the back of rising long-term yields as investors consider the potential for heftier government borrowing in Europe to bolster defence spending and nudge a higher in short-term yields on the back of stronger than expected preliminary Eurozone inflation for February (at 0.5% M/M and 2.4% Y/Y), Scotiabank's Chief FX Strategist Shaun Osborne notes."

"EZ/US 2Y spreads have narrowed to –194bps, the narrowest since late January. Spot continues to trade quite significantly below our short-term FV estimate (1.0744 today)."

"Solid gains intraday so far suggest firm support for the EUR around the upper 1.03 zone (40-day MA at 1.0393) and the potential for spot gains to extend to the low 1.05s (100-day MA at 1.0512, recent peaks around 1.0530)."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.