- The euro cuts losses against the US dollar, recovers 1.1600.
- The US dollar retreats across the board as US yields fall.
The EUR/USD it bottomed out earlier Monday at 1.1589, hitting the lowest level in a week. After the start of the US session, it rallied to around 1.1615, down on the day, but far from lows.
The EUR / USD break below 1.1615 ended the days of a trading range between 1.1615 and 1.1670. The euro is back near the 1.1620 zone; a rally above should ease the downward pressure. The euro remains one of the worst performers on Monday before the ECB meeting on Thursday.
“The focus of the Eurozone is on the ECB meeting, but I don’t think it is a big market driver, save for a staggering shift towards an aggressive bias. What the euro needs, if it wants to break to the upside, is better economic data. Supply chain problems have taken a toll and if that doesn’t change then the euro will deviate until the US rate outlook triggers the next leg lower for the EUR / USD and a further reversal of the bullish move. we’ve seen since the Fed came to everyone’s aid in March 2020, ”said Kit Juckes, chief global currency strategist at Société Générale.
The dollar lost momentum amid a drop in US yields. The 10-year yield fell from 1.68% to 1.62% in a few minutes and pushed the DXY away from the 94.00 area. Also, risk appetite weighed on the dollar. The S&P 500 Index hit a record high and was up 0.28%; the Nasdaq gained 0.52%.
US economic data beat expectations with the Dallas Fed manufacturing index rising to 14.6 in October above the market consensus 6.8. The key report will be the third quarter growth numbers on Thursday.