EUR/USD set to end the week on a sour note, drops sharply back below 1.2100


  • EUR/USD is ending the week on a sour note and has dropped back under 1.2100.
  • USD buying into the month-end is the main driver, but dovish ECB rhetoric isn’t helping.

What looked like a promising week for the euro is ending on a sour note. Having hit seven-week highs in the 1.2240s on Thursday (up more than 1.0% at the time), the currency pair has reversed sharply and is now back beneath the 1.2100 mark and at fresh lows for the week in the 1.2070s. On the day, EUR/USD is now down roughly 0.75% or about 90 pips. That means its losses on the week stand at about 0.3% or close to 40 pips.  

ECB officials have dialed up the dovish rhetoric and this appears to be weighing on the euro on Friday, though month-end USD buying appears to be the main driver; risk-sensitive AUD, NZD and CAD are suffering to an even greater extent on the day versus the US dollar, down 1.9%, 1.6% and 0.9% respectively. Moreover, on the week, the euro is actually the best performing G10 currency versus the USD, with GBP in second place, down 0.4%.

Dovish ECB signals more QE incoming

From the outset of the week, the ECB has been the most dovish sounding of the major developed market central banks with regards to the recent rising in long-term government bond yields. On Monday, ECB President Christine Lagarde said the ECB will closely monitor long-term interest rates. Throughout the week, numerous other ECB officials reiterated the same line, all hinting at potential action.

But on Friday, ECB Governing Council Member Yannis Stournaras went one step further to become the first member of the ECB to an outright call for an increase to the pace at which the ECB buys government bonds in order to address what he called an “unwarranted tightening of financial conditions”. The Greek central banker said that there is no fundamental justification for a tightening of nominal bond yields at the long-end.

Euro traders will be closely watching the release of weekly Pandemic Emergency Purchase Programme data next Tuesday for any indications that the bank stepped up its bond-buying efforts this week. Signs that it has increased the pace of asset purchases could be taken as a dovish signal and hurt euro versus currencies whose central banks have taken a more sanguine view of the recent rally in bond yields (like USD and GBP).

EUR/USD

Overview
Today last price 1.208
Today Daily Change -0.0083
Today Daily Change % -0.68
Today daily open 1.2163
 
Trends
Daily SMA20 1.2097
Daily SMA50 1.2153
Daily SMA100 1.2023
Daily SMA200 1.179
 
Levels
Previous Daily High 1.2243
Previous Daily Low 1.2156
Previous Weekly High 1.217
Previous Weekly Low 1.2023
Previous Monthly High 1.235
Previous Monthly Low 1.2054
Daily Fibonacci 38.2% 1.2189
Daily Fibonacci 61.8% 1.221
Daily Pivot Point S1 1.2132
Daily Pivot Point S2 1.21
Daily Pivot Point S3 1.2045
Daily Pivot Point R1 1.2219
Daily Pivot Point R2 1.2274
Daily Pivot Point R3 1.2306

 

 

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.

Feed news

Get Weekly Crypto trade ideas!  
Empower yourself with the best market insights

Join FXStreet Premium!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD stabilizes after US retail sales smash estimates

EUR/USD has bounced off its lows but remains below 1.20 after US retail sales smashed estimates with a 9.8% leap. Moreover, jobless claims tumbled to 576,000. Markets are digesting the big bulk of data.

EUR/USD News

GBP/USD rises toward 1.38 ahead of Brexit meeting

GBP/USD maintains a cautious approach below 1.3800, accumulating minor losses. Global risk uncertainties weigh on the pair. Investors await the Brexit meeting on the NI issue.

GBP/USD News

ETH seizes the spotlight as BTC and XRP contemplate retracement

Bitcoin price shows a correction in play after the MRI flashed a red ‘one’ cycle top signal. Ethereum shows a strong trend continuation while the rest of the market experiences a minor pullback. 

Read more

XAU/USD jumps above $1,760 amid slumping US T-bond yields

Gold extended its daily rally beyond $1,760 on Thursday. 10-year US Treasury bond yield is down more than 4% on the day. US Dollar Index falls into the negative territory below 91.60.

Gold News

Citi (C) beats on EPS and revenue, investment banking booms!

Citigroup (NYSE:C) reports Q1 2021 earnings showing strong growth in investment banking following on from Goldman smashing it on Wednesday. Citi shares are trading $74.20 in pre-market up nearly 2%.

Read more

Forex MAJORS

Cryptocurrencies

Signatures