Government bond yield pushes dollar higher

At the end of last week, almost all major currencies closed higher against the US dollar. The Canadian dollar (1.42%). and the Swiss franc (0.08%).  On Friday, the euro ended in decline. The euro fell 0.28% against the U.S. dollar to 1.1950. The exchange rate fell to 1.1910 due to a rise in the yield on 10-year US bonds (US10Y) to 1.637% per annum. As soon as profitability entered the correction phase, the euro jumped to 1.1961. The sharp rebound was due to a sharp rise in the euro/pound pair.

Scheduled Statistics (GMT) 3):

At 15:15 p.m. Canada will publish data on the change in the number of new foundations for February, and at 15:30 – on the change of production supply for January. The U.S. will present the Manufacturing Activity Index from the Federal Reserve Bank of New York for March.At 11 p.m., the U.S. will report changes in net and total purchases of long-term U.S. securities by foreign investors in January.

Current situation

Trades in Asia opened with the dollar index falling against the backdrop of a us10Y performance decline. As it returned from 1.625% to 1.637%, the major currencies were again under pressure. Janet Yellen said inflation is under control. The risk of a strong acceleration in inflation in the United States is very small. Investors do not believe in the statements of officials, so there is a high sensitivity to the dynamics of US10Y. The euro fell from a high of 1.1967 to 1.1926. The price has fallen below the balance sheet line (Sma 55) and is currently on trend line from a low of 1.1836. For buyers, the exciting moment is that government bond yields are not decreasing. Given that the economic calendar is empty for today, the dynamics of the US10Y is the main driver for all markets.

The fomc meeting and press conference of US Federal Reserve chief Jerome Powell remain the focus of investors’ attention. We believe that a topic with profitability should be sidelined as it does not present any threat. Stock markets are no longer responding to this. Powell made it clear that the central bank’s monetary policy would remain benign and had no plans for a review. He expects inflation to rise, but is convinced that increase will not affect the plans. This means that we must first hear from central bank bosses that ‘inflation is crying out for anxiety’. Only then can you already track bond yields.

Support is at 1.1913. If profitability continues to grow rapidly, the euro will fall to 67 grams. – 1,1885. If it goes down and goes into the correction phase, then expect a recovery to 1.1960.

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