- EUR/USD could rise if German yields chart recovery on fiscal stimulus hopes.
- Der Spiegel reported on Friday that Germany could take on new debt to counter the recession.
EUR/USD is at the mercy of the action in the German bond yields amid rising dovish European Central Bank (ECB) expectations and the talk of German fiscal boost.
The yield on the German 10-year bond yield remained under pressure throughout the last week as investors piled into safe-haven assets on fears of a European recession.
Notably, the benchmark yield printed a new record low of -0.726% on Friday before closing the day with moderate gains to -0.684%.
The yield recovered after Der Spiegel magazine said the German government is considering ditching its balanced budget rule and could take on new debt to counter a possible recession.
German yields could rise this week in the EUR-positive manner on fiscal stimulus hopes. That said, the upside, if any, will likely be capped around the former support-turned-resistance of 1.1162, as investors are still betting on a raft of stimulus measures from the ECB.
The central bank is expected to cut rates further into the negative territory next month. As of now, the ECB's deposit rate stands at -0.4%.
With markets focused on German government's and ECB's response to the economic slowdown and the resulting action in the bond yields, the Eurozone current account data for June, due for release at 08:00 GMT, and the consumer price index, scheduled for release at 09:00 GMT, are unlikely to move the needle on the EUR pairs.
As of writing, the pair is trading at 1.1090, having dropped for the fourth straight session on Friday.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.