- The dollar remains firm supported by a rise in Treasury bond yields.
- EUR / USD fails to maintain recovery and is vulnerable.
The EUR / USD had bottomed out in European hours at 1.1683, just above last week’s low, and rebounded to 1.1710. But the euro was unable to consolidate the recovery and is back in the 1.1690 zone, targeting the recent low at the 1.1680 zone.
The negative tone remains firm, underpinned by a strong dollar as a result of the rise in Treasury bond yields. The 10-year rate is at a maximum in months near 1.50%, the five-year yield exceeded the highs of the pandemic.
After elections, focus on returns
Sunday’s elections in Germany left a picture of uncertainty ahead. The victory of the Social Democrats over Chancellor Merkel’s party was by a small difference (25.7% to 24.1%). This implies that the formation of a government will depend on the coalitions. Analysts say there will be a period of negotiations that could last several months until finally having the name of who will replace Merkel.
Looking ahead to the next few hours, what happens in the bond market will continue to be key for the dollar in general. Regarding this, two officials of the Federal Reserve They will give their first public words after last week’s FOMC meeting: Leal Brainard (Fed Governor) and John Williams (New York Fed).
Regarding data, the August durable goods orders report will be published in the US at 12:30 GMT, which is expected to show an improvement of 0.7% and then at 14:30 GMT the manufacturing index of the Dallas Fed for September.