EUR/USD loses grip on 1.1900 level, eyes two-week lows


  • EUR/USD continues to trade on the back foot and has now convincingly lost its grip on the 1.1900 level.
  • The recent drop was prompted by news that the Fed will not be extending SLR rules at the month’s end.

EUR/USD continues to trade on the back foot and has now convincingly lost its grip on the 1.1900 level, taking its close to two-week lows around the 1.1970 mark. On the day that means the pair is now trading about 0.3% or just over 30 pips lower on the day, with the bears now likely eyeing a test of the 2021 lows just under 1.1840 should the selling pressure continue.

Driving the day

The recent drop from the 1.1900 level towards 1.1880 has been prompted by news that the Fed will not be extending pandemic-era supplementary leverage ratio (SLR) rules at the end of the month – these rules had allowed banks to hold US treasuries and deposits on their balance sheets exempt from normal capital ratio requirements, a ruling the Fed decided upon in the early stages of the Covid-19 crisis order to stem excessive selling pressure in US treasury markets. The SLR rules will expire at the end of the month.

Wall Street banks had been lobbying for an extension of SLR and now face having to either reduce their holdings of treasuries (i.e. by selling US government bonds) or raise additional capital hold against these treasury holdings (i.e. by selling other assets) – thus the market reaction to this news is unsurprising, with US government bond yields rallying sharply off lows (the US 10-year is now flat on the day at 1.73% having been as low as 1.68%) and US stocks dropping (the S&P 500 dropped to 3900 and is down 0.3% on the day).

In terms of other news/themes of note for EUR/USD; Fed Chair Jerome Powell released an article on the WSJ, but it did not move markets given a lack of any new information on policy or the Fed’s outlook on the economy – rather the article seemed to be more of a recap of what has happened in the last 12 months in the global and US economy with regards to the pandemic and Powell’s justification for the Fed’s response.

Elsewhere, news regarding the Covid-19 pandemic in Europe continues to worsen; following the news that France would be tightening lockdown in 16 regions (covering 40% of the country’s GDP), the German Health Minister was on the wires this morning talking about how there isn’t enough vaccine supply to stop a third wave in Europe this summer. He predicted things could be as bad at Easter as it was over Christmas and revealed that AstraZeneca will be delivering fewer vaccines than expected in Q2. Various desks have been downgraded their forecasts the French economic recovery in 2021 as a result, a blow to the euro.

Meanwhile, despite the EMA’s review concluding that the benefits of the AstraZeneca vaccine far outweigh the risks, many European nations are not rushing to restart their rollouts of the vaccine, costing the bloc precious time in the race for herd immunity.

EUR/Usd

Overview
Today last price 1.188
Today Daily Change -0.0035
Today Daily Change % -0.29
Today daily open 1.1915
 
Trends
Daily SMA20 1.2012
Daily SMA50 1.2072
Daily SMA100 1.2051
Daily SMA200 1.1851
 
Levels
Previous Daily High 1.1989
Previous Daily Low 1.1906
Previous Weekly High 1.199
Previous Weekly Low 1.1836
Previous Monthly High 1.2243
Previous Monthly Low 1.1952
Daily Fibonacci 38.2% 1.1938
Daily Fibonacci 61.8% 1.1957
Daily Pivot Point S1 1.1884
Daily Pivot Point S2 1.1854
Daily Pivot Point S3 1.1802
Daily Pivot Point R1 1.1967
Daily Pivot Point R2 1.2019
Daily Pivot Point R3 1.205

 

 

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.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD battles with 1.1700 as the market mood turns sour

Poor German data and renewed concerns about a default of the Chinese Evergrande property giant undermined investors’ sentiment, pushing them into the dollar’s safety.

EUR/USD News

GBP/USD accelerates its slump, trades around 1.3650

GBP/USD is under strong selling pressure, trimming most of its post-BOE gains. Concerns about the global financial health and slow moves towards tapering weigh on markets.

GBP/USD News

XAU/USD hangs near multi-week lows, around $1,745 ahead of Powell

Gold struggled to capitalize on its attempted intraday recovery move. Hawkish Fed/BoE, rising bond yields acted as a headwind for the metal. Resurgent USD demand exerted additional pressure on the commodity.

Gold News

PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’

PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.” Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law. 

Read more

Evergrande, VIX and yields make for choppy day ahead

Equity markets remain focused on Evergrande as rumours of a possible default on overseas debt swirl. The market appears to be on the hunt for negative news, which leads us to conclude that stocks are going lower in the short term.

Read more

Forex MAJORS

Cryptocurrencies

Signatures