- The 2-year US-German (DE) yield differential rose to fresh highs since 1989 on Tuesday. That could weigh over the EUR.
- The Eurozone data docket is thin, so trade-related headlines and the action in the equity markets could influence the common currency.
The EUR/USD closed at 1.1604 yesterday, having hit an intraday high of 1.1644 and was last seen trading on a weaker note at 1.1586.
The retreat from the highs seen yesterday is likely associated with the rise in the US two-year yield to the highest level since 2008. Further, the 10-year treasury yield rose to five-week highs in the USD positive manner.
More importantly, the spread between the US two-year treasury note and its German counterpart jumped to 330 basis points, its highest level since 1989.
The common currency could remain on the defensive if the yield spread continues to rise today. The European data docket is thin, hence the focus remains on the trade-related headlines and the sentiment in the equity markets.
Wall Street Journal (ESJ) reported yesterday that China has assured the US multinationals that they would not be targeted in the ongoing trade war with the US. The easing in US-China tensions could stabilize the risk sentiment and offer help to the EUR. Also, a potential corrective rally in the EM currencies could help stabilize the risk sentiment.
EUR/USD Technical Levels
Resistance: 1.1606 (10-day moving average), 1.1659 (Sep. 6 high), 1.1733 (Aug. 28 high)
Support: 1.1568 (38.2% Fib R of Aug. 15 low/Aug. 28 high), 1.1526 (Sep. 9 low), 1.1508 (June 21 low)
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
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.