- Euro recovers as stocks continue to slide worldwide.
- EUR/USD bounces sharply from monthly lows to highest since Thursday.
- US yields collapse as risk aversion triggers demand for safe assets.
The EUR/USD rebounded sharply from its lowest level since April, below 1.1770, and printed a fresh daily high at 1.1825. It is hovering around 1.1815, slightly positive for the day after a reversal, as global markets and commodities fall sharply.
ECB week starts with a sell-off in stock markets
Usually, volatility is low at the beginning of the week; however, today is not the case. The sharp decline across global markets triggered wild moves in the currency market. The yen so far is the best performer among the G10 space, followed by the euro and the Swiss franc.
After the beginning of the American session, the euro rebounded sharply. EUR/USD rose from1.1760 back to 1.1820, hitting at 1.1824, the highest level since Thursday. The recovery from three-month lows put the pair back into the recent range between 1.1770 and 1.1850, slightly below the 20-day moving average.
The Dow Jones is falling by 2.25% and the Nasdaq by 1.68%. In Europe, the main indices are losing 3% on average. At the same time, the US 10-year yield, dropped below 1.20%, the lowest since mid-February.
The focus is now on equities and risk sentiment. The key event of the week will be on Thursday: the European Central Bank meeting. According to analysts at Brown Brother Harriman, the central bank could deliver “a very dovish hold”. No change in rates is expected. It will be the first meeting since the new strategy was announced.
Technical levels
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