EURUSD returns to decline as US Treasury yields rise

Last Updated on March 5, 2021

EURUSD witnessed a limited decline in the morning of trading on Wednesday in the European market, re-recording its losses that stopped yesterday within the rebound operations from its lowest level in a month, this decline comes as investors focus on buying the US dollar as an alternative investment, in addition to the high yields of treasury bonds. American.

EURUSD traded at $ 1.2074, down by more than 0.2%, from today’s opening session at $ 1.2090, and the single currency yesterday achieved a 0.4% rise within the rebound operations from its lowest level in a month at $ 1.1991.

EURUSD

Fabio Panetta, a member of the European Central Bank’s monetary policy, stated that it is necessary for the bank to expand its bond purchases program in order to keep the rate of return at a low value.

EURUSD declines after rising US Treasury yields

The US dollar achieved a rise against many major currencies, resuming its rise, which stopped yesterday with the activity of corrections and profit-reaping after it recorded its highest level in a month, and the US dollar also supported the increase in US Treasury yields, and the index traded at 90.81 points, up by more than 0.1%.

The biggest focus among dollar traders has been the ongoing activity in the bond market, after bond yields soared to nearly 1.60% last week, the 10-year yield fell to 1.41% yesterday, however, today the yield has increased 0.15% to 1.44%. The current five-year yield has decreased to 0.703% while the 30-year yield has increased to 2.2%.

Analysts monitor the performance of the bond market for clues about the Fed’s actions. The high yields indicate that investors are optimistic about the overall economic recovery. As a result, this means that the bank is likely to raise interest rates earlier than expected.

This measure is mostly due to ongoing stimulus measures. Last week, Democrats in the House of Representatives passed a stimulus package worth $ 1.9 trillion. This package is now being discussed in the Senate and is expected to pass next week.

As a result, investors believe that such a deal will increase economic activity and force the Federal Reserve to act, recent data shows that the US economy is on the way to recovery, more than 48 million Americans have already received a vaccine, and this trend is likely to accelerate after the Johnson & Johnson single-dose vaccine Johnson.

Professional Trader and Analyst, economist in Financial and Forex marketsince 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.
Mohammed Abdelkhalik

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