EUR/USD slides on US bond yield strength despite higher core inflation in the EU

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EUR/USD slides on US bond yield strength despite higher core inflation in the EU – by christianborjon EURUSD Majors Currencies

maintained the Euro afloat, but high US Treasury bond yields cap the pair from reaching 1.1000. At the time of writing, the EUR/USD is trading at 1.0954, below its opening price by 0.15%.Wall Street is trading with losses. US Treasury bond yields continued to edge higher, with the 2-year, the most sensitive to shifts in monetary policy, up six bps at 4.267%. Theshows a chance of 84% for a 25 bps rate hike by the Fed at the upcoming May meeting, weighing on investors’ mood.

Regarding monetary policy, Bostic favors one more hike and a pause, while Bullard expects an additional 50 bps of tightening to lift, which measures the performance of six currencies against the American Dollar , roses 0.17%, at 101.881. Of note, the DXY has tested the 20-day EMA at 102.21 three times, meaning that demand has not been as strong to clear the latter, which could open the way toward 102.900.

On the EU front, March’s inflation in the bloc edged from 8.5% to 6.9% YoY as energy prices continued their downtrend. However, core inflation remains stubbornly stickier, following the global trend. The Core Harmonised Index of Consumer Prices rose by 5.7% YoY, unchanged from the latest reading and the consensus, as European Central Bank policymakers worried that high energy costs passed to the broader economy.

 

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