- The euro recovers as stocks continue to slide around the world.
- EUR / USD bounces sharply from monthly lows to highs since Thursday.
- US yields collapse as risk aversion generates demand for safe assets.
The pair EUR/USD it rebounded sharply from its lowest level since April, below 1.1770, and reaches a new daily high at 1.1825. It moves around 1.1815, modestly positive for the day after a reversal, as global markets and commodities plummet.
The ECB week begins with a liquidation in the stock markets
Volatility is generally low at the beginning of the week; however, this is not the case today. The sharp drop in global markets triggered wild movements in the forex market. So far, the yen is the best performer among the G10 space, followed by the euro and the Swiss franc.
After the start of the US session, the euro rallied strongly. EUR / USD rose from 1.1760 to 1.1820, reaching 1.1824, the highest level since Thursday. The recovery from the three-month lows put the pair back in the recent range between 1.1770 and 1.1850, modestly below the 20-day moving average.
The Dow Jones falls 2.25% and the Nasdaq 1.68%. In Europe, the main indices are losing 3%. At the same time, the US 10-year yield fell below 1.20%, the lowest since mid-February.
The focus is now on equities and risk sentiment. The key event of the week will be Thursday: the meeting of the European Central Bank. According to analysts at Brown Brother Harriman, the central bank could offer “a very moderate hold.” No changes in rates are expected. It will be the first meeting since the new strategy was announced.