The euro has started the week in negative territory, dropping below the 1.19 level. Currently, EUR/USD is trading at 1.1879, down 0.24% on the day.
Dollar beating up on euro
The euro had a field day with the dollar late in 2020, as EUR/USD posted sharp gains. The roles have now reversed, as the euro has fallen to levels last seen in November 2020. The euro has managed only two winning weeks since the New Year, as the US dollar is no longer the punching bag for the major currencies. Last week, EUR/USD fell by 1.34% and fell below the 1.19 level for the first time since November 2020.
The catalyst for the dollar strength has been the rise in US Treasury yields. The 10-year bond climbed to 1.60% earlier on Monday, while 30-year bonds rose to 2.31%. This was in response to the Senate passing a massive 1.9 trillion dollar stimulus package on Saturday. The Democrats, who control both houses of Congress, plan to send the bill to President Biden for his signature by March 14.
The ECB is none too pleased about the rise in US Treasury yields, which, along with higher oil prices, has led to eurozone yields moving higher as well. With the eurozone still in an economic downturn due to the Covid pandemic, higher yields could lead to higher borrowing costs which would hamper economic recovery. The ECB meets for a policy meeting on Thursday and policymakers are expected to state their displeasure with the rise in eurozone bond yields, which could add to the euro’s woes.
Eurozone data was a mix on Monday. German Industrial Production came in at -2.5%, its first decline in five months. There was better news from the Eurozone Sentix Investor Confidence, which climbed to 5.0, its best gain since February 2020.
EUR/USD Technical
