EUR/USD has seen a surprising reversal after printing fresh annual lows under 1.1520
November 7, 2021
The pair is now trading back to the north of the 1.1550 level and back to trading flat on both the day and week. The most recent move is dollar-driven, with the buck losing ground versus all of its major G10 counterparts. The US dollar has slid down the G10 rankings in recent trade and now sits around the middle of the performance table, having prior to the US data been one of the better performing G10 currencies.
Profit-taking with the currency pair at year-to-date extremes may be one reason for the bounce. More likely is that FX markets are taking their cue from some odd moves being seen in global bond markets. Global bond yields continue to slide, though are on Friday being driven in the US; US 2-year yields are down about 3bps to back under 0.40%, while 10-year yields currently trade lower by about 7bps and have fallen to their lowest since late September around 1.45%. Meanwhile, European yields are also falling, though to a slightly lesser degree, with German 2-year yields down about 2bps to -0.74% and German 10-year yields down about 6bps to around -0.28%. US/European yield differentials have thus seen a very modest closing, supporting EUR/USD.
EUR/USD has bounced from fresh annual lows under 1.1520 to trade flat on the day and week above 1.1550.
The US dollar has been weakening in recent trade as US bonds lead to a further decline in global yields. pic.twitter.com/3wmkOjD0F1— 360ForexSignals.com (@petromenea) November 7, 2021