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Widening spread between US and German bond yields increases pressure on EUR / USD

Mar 30 2021, 12:30 PM (+06) |


The EUR / USD pair remains under pressure due to the strengthening of the dollar and the difficult epidemiological situation in the EU.

The dollar index rose by 0.2% this morning amid rising US Treasury yields. After a short pause, the yield on US bonds began to rise again due to expectations of rising inflation in the US. The yield on 10-year bonds is now approaching a 14-month high of 1.754%. Perhaps today we will see a breakdown of this mark, which could provoke an even stronger rise in the dollar. The widening spread between US and German bond yields increases pressure on the single currency.

The news about the spread of the coronavirus in Europe remains a downward factor for the euro. The number of cases continues to rise, forcing countries to extend or strengthen measures to restrict the movement of citizens. Tightening measures to contain the coronavirus in France, Germany and other EU countries have darkened the short-term outlook for the European economy. Now investors are betting that the US economy will recover at a faster pace than the EU economy. Considering the above, the dollar seems to be a more attractive asset for investment.

In the economic calendar, the central event of the day will be the publication of data on the consumer confidence index CB for March. The indicator is expected to grow from 91.3 to 96.9 points.

On the chart, the situation has not fundamentally changed over the course of the day. The downtrend remains relevant. We expect further decline from the currency pair. The first stop may occur at 1.1740.

· Resistance levels: 1.1820, 1.1850, 1.1890.

· Support levels: 1.1740, 1.1700, 1.1650.

The main scenario is a correction to 1.1820 and a downward reversal.

An alternative scenario is a decline to 1.1740 and an upward correction.

The current fundamental background is negative. We are looking for sell signals on a price rollback to the levels of 1.1820 and 1.1850.

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