The euro fell against the dollar, erasing most of yesterday’s gains after the dovish FOMC rate decision as the dollar recovered, surging higher. The EUR/USD currency pair fell amid a risk-off market environment as investors gravitated towards the higher-yielding Dollar while dumping the riskier currencies.
The EUR/USD currency pair fell from a high of 1.1988 in the early Frankfurt session to a low of 1.1908 in the New York market and was trading near these lows at the time of writing.
The rally in US Treasury yields drove the currency pair’s decline as US government bonds continued to sell off, driven by the huge supply from the $1.9 trillion stimulus spending bill. The release of the downbeat eurozone trade balance report for January contributed to the pair’s losses. According to Eurostat, the eurozone’s trade surplus shrunk to €24.2 billion in February compared to €27.5 billion in December. The ECB President Christine Lagarde speech downplaying the recent inflation uptick in the euro area as revealed in January’s inflation figures. Investors were worried that the European Central Bank’s bond-buying programme would trigger a surge in the region’s inflation rate.
The fibre levelled off in the American market after the release of the US initial jobless claims report by the Department of Labor, which came in at 4.12 million versus consensus estimates of 4.07 million. The dollar’s rally as tracked US Dollar Index drove the pair lower.
The currency pair’s future performance is likely to be affected by tomorrow’s German PPI and US dollar dynamics.
The EUR/USD currency pair was trading at 1.1914 at 20:02 GMT, having dropped from a high of 1.1988. The EUR/JPY currency pair was trading at 129.73 after falling from a high of 130.66.
© SimonMugo for Forex News, 2021. |
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Post tags: Christine Lagarde, Department of Labor, EUR/JPY, EUR/USD, European Central Bank, Eurostat, Eurozone, Inflation, Jobless Claims, Stimulus, Trade Balance, Treasuries, US Dollar Index
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