EUR/USD: The Euro Has Fallen On The Back Of A Rise In Us Bond Yields

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On Wednesday, trading on the euro closed down. During trading in New York, the euro fell to 1.0535 as the release of statistics in the US fell kindly in the dollar. The number of new private sector jobs in February exceeded expectations. The previous figure was revised and upgraded.

The euro subsequently bounced up to 1.0563 as German 10-year bond yields rose by 15.3%. The effect from the European debt market was minimal.

On this news, US 10-year bond yields rose by 1.74% to 2.562%. The probability of a rate hike by the Fed in March has risen from 84.1% to 90.8%, in May from 85.5% to 91.4%, and in June from 92.2% to 95.8%.

The number of new private sector jobs came to 298,000 (forecasted: 190,000, previous figure revised from 246,000 to 261,000).

Market expectations:

In Asia, US 10-year bond yields have grown by 0.77% to 2.571%. Correspondingly, the EUR/USD rate has fallen to 1.0529. Sellers are showing some bearish behaviour in anticipation of a rate hike by the Fed on the 15th of March, trying to bring the price down to around 1.0495.

For Thursday, traders will be focusing on the ECB meeting and the press conference with Draghi that will follow. I don’t make forecasts on days when there is a press conference with the head of the ECB, or on payrolls day (Friday). These are two events that will have a short-term effect on the euro, but at the same time, it will pose a problem for traders who are using technical analysis in their trading strategies.

Day’s news (GMT+3):

09:00 Japan: machine tool orders (Feb);

09:45 Switzerland: unemployment rate (Feb);

15:30 USA: Challenger job cuts (Feb);

15:45 Eurozone: ECB interest rate decision;

16:30 Eurozone: ECB statement and press conference;

16:30 Canada: new housing price index (Jan), capacity utilisation (Q4);

16:30 USA: initial jobless claims (Mar 3), import price index (Feb).