TRENDING:

XAU/USD

EUR/USD

EUR/USD - Rates futures put EUR on the back foot ahead of the Fed

Interest rate futures signal ECB likely to delay tightening.
Bond yield spreads favor USD.
A hawkish Fed could push EUR/USD below 1.20.

Omkar Godbole FXStreet Contributor

The EUR/USD remains trapped in 1.2250-1.2450 range even though the top European Central Bank (ECB) officials stressed this week that stimulus will end only after inflation starts moving towards the 2 percent target.

However, the Eurozone interest rate futures have started pricing-in a delay in the ECB tightening. For instance, the European Interbank Offered Rate (EURIBOR) three-month futures daily chart shows a bullish breakout, meaning the yields will likely fall (investors are digesting the dovish ECB).

FEIMR (Euro 3 month Euribor future)

Yield spreads continue to rise in the USD-positive manner

Further, the two-year US-German bond yield spread stands at 285.67 basis points - the highest level since 1997. Meanwhile, the 10-year yield spread has risen to 225 basis points, its highest level since December 2016.

So, the current levels in the EUR/USD are unjustified and the common currency is on the defensive ahead of the Fed. The pair may drop below 1.20 if the Fed revises its dot plot forecast to four (or five) rate hikes this year from the December forecast of three rate hikes.

EUR/USD Technical Levels

The pair clocked a low of 1.2295 in Asia and was last seen trading at 1.2309. The pullback from 1.2413 (March 14 high) has established another lower high on the daily chart and suggests the erratic rise from 1.2273 (March 9 low) has ended. That said, only a clear break below 1.2273 would signal resumption of the sell-off from 1.2446 (March 8 high) and open doors for 1.2206 (Feb. 9 low) and 1.2154 (March 1 low).

On the higher side, a close above 1.2413 would allow a stronger rally to 1.25 (psychological level + multiple daily highs) and 1.2538 (Jan. 25 high).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	High
1H	Bearish	Neutral	Low
4H	Bullish	Oversold	Shrinking
1D	Strongly Bearish	Neutral	Low
1W	Bearish	Neutral	High
Updated Mar 16, 04:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.

EUR/USD - Rates futures put EUR on the back foot ahead of the Fed

Broker Reviews

Editor's Picks