EUR/USD Under Extreme Pressure After US Dollar Rally


EUR/USD has lost about 0.36% of its value in 24 hours to trade at 1.1002. The dollar increased as concerns about earnings and the state of the global economy grew, which caused the currency pair to fall from nearly a 10-month high.

Key Takeaways:

  • The EUR/USD is losing ground as the US Dollar rebounds.
  • EUR dropped from a 10-month high.
  • Concerns over corporate earnings and the global economy increased, which led to a rise in the dollar.
  • Later in the day, the US Consumer Confidence Index will gain traders’ attention.

USD increased in earnings, EUR/USD drops

First Republic Bank (FRC) released mixed first-quarter results on Monday. Additionally, it revealed plans to reduce staff by at least a fifth as the small American lender experienced a more significant decline in deposit levels than anticipated as clients rushed to withdraw money in the wake of the recent banking turmoil. The announcement of falling FRC deposits provided a reminder that stability issues have not subsided.

Moreover, UBS reported a 52% yearly decline in net profit on Tuesday due to a long-standing legal dispute. However, it remains a “source of stability” for its clients at times of significant uncertainty.

Despite this, central banks intend to cut back on the frequency of their dollar liquidity activities with the US Federal Reserve starting in May, suggesting that the March financial market volatility has passed.

The dollar increased as concerns over earnings increased. The US dollar index (DXY), which gauges the dollar’s worth for a selection of six important foreign currencies, is now up around 0.25% at 101.57. The strengthening dollar weighs on the EUR/USD currency pair.

US economic data in focus

Recent US economic statistics confirmed hawkish market sentiments towards the Fed’s monetary policy. The odds of a 25 basis point hike in interest rates in May jumped to 84%, according to the CME FedWatchTool.

Investors are now waiting for crucial US data on consumer confidence, which is expected to drop slightly to 104.1 in April from 104.2 in March. US house sales are predicted to fall from 640,000 in February to 633,000 in March.

The PCE price index, the Fed’s preferred inflation metric, will be released later this week. Additionally, investors believe that the US core CPI’s stickiness might push the Fed to keep adopting a hawkish posture on interest rate policy.

The dollar increased before significant US data, which weakened EUR/USD.

Dovish ECB policymaker adding in the Pressure

In a recent interview with Le Figaro, French ECB policymaker Francois Villeroy de Galhau urged caution. He stated that future rate increases should be moderate in both their frequency and magnitude. However, markets continue to be fixated on the possibility of more increases.

Additionally, the lack of data releases on Tuesday in the euro calendar will undoubtedly draw focus to the US schedule. In reaction to some indications of strength from the dollar, further weakening caused the EUR/USD to drop from recent heights.

For the great doesn’t happen through impulse alone, and is a succession of little things that are brought together.

Vincent van Gogh