EUR/USD – Euro Under Pressure as US Treasury Yields Spark Dollar

EUR/USD remains under pressure and has posted losses for three straight sessions. The pair is steady in the Tuesday session and is trading at 1.2204, down 0.04% on the day. On the release front, German Ifo Business Climate dropped sharply to 102.1, missing the estimate of 102.7 points. In the US, today’s key event is CB Consumer Confidence, which is expected to dip to 126.0 points. As well, the US releases housing and manufacturing reports.

The US dollar started the week with broad gains and has pushed the euro down to 8-week lows. The catalyst for the greenback rally was higher yields for 10-year US treasury bills, which rose to 2.996% on Monday. Higher yields for US-T bills have made them more attractive than European or Japanese counterparts. With oil pushing above $70 a barrel, there are concerns that inflation will rise, which has pushed bond prices lower and yields upwards. The dollar has also benefitted from a reduction in geopolitical risk, with an easing of tensions between North and South Korea, and a lull in the conflict in Syria.

The markets are keeping a close eye on the ECB, which holds a policy meeting on Thursday. Despite stronger economic conditions in the eurozone, the ECB has been in cautious mode. At the March meeting, policymakers took a small step, dropping a pledge to increase stimulus if needed. Will we see additional ‘baby’ steps at the April meeting? The markets are not expecting any change in forward guidance, and concerns over recent trade disputes could mean a dovish statement from ECB President Mario Draghi. Traders shouldn’t expect any dramatic moves at the policy meeting, as the bank will likely continue to preach patience and prudence.

USD Back with a vengeance

EUR/USD Fundamentals

 Tuesday (April 24)

  • 4:00 German Ifo Business Climate. Estimate 102.7. Actual 102.1
  • 9:00 Belgian NBB Business Climate. Estimate -0.6
  • 9:00 US HPI. Estimate 0.5%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%
  • 10:00 US CB Consumer Confidence.  Estimate 126.0
  • 10:00 US New Home Sales. Estimate 625K
  • 10:00 US Richmond Manufacturing Index. Estimate 16

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, April 24, 2018

EUR/USD for April 24 at 5:25 DST

Open: 1.2208 High: 1.2241 Low: 1.2181 Close: 1.2204

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2025 1.2025 1.2092 1.2235 1.2319 1.2460

EUR/USD continues to lose ground and break below support levels. The pair showed negligible movement in the Asian session. In European trade, the pair posted small gains and has retracted

  • 1.2092 is providing support
  • 1.2235 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 1.2092, 1.2025 and 1.1916
  • Above: 1.2235, 1.2319, 1.2460 and 1.2581
  • Current range: 1.2092 to 1.2235

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains in short positions. Currently, long and short positions are evenly split, indicative of a lack of trader bias as to what direction EUR/USD takes next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.