US dollar spikes as the US bond sell-off gains steam
The euro declined slightly even after the relatively strong consumer and industrial sentiment data from the region. According to the European Commission, industrial sentiment improved from - 3.1 in February to 2.0 in March. In the same period, services sentiment increased from - 17 to - 9.3, better than the expected improvement to - 14.4. In total, the business and consumer survey increased from 93.4 to 101. In general, sentiment has gained because of the ongoing roll-out of the coronavirus vaccine. Earlier on, data from Germany showed that the import price index rose by 1.4% year-on-year in February.
The US dollar index rose sharply today as the market reflected on the rising US Treasury yields. The benchmark 10-year yield rose by almost 3% to 1.76%, the highest level in more than 16 months. The 30-year bond yield rose by more than 1% to 2.45% while the 5-year yield rose to 0.944%. The rising yields are a signal that investors are pricing in higher inflation and interest rates in the United States. This will be driven by the recent $1.9 trillion stimulus package and the ongoing recovery due to vaccinations.
The price of crude oil declined slightly, in part, because of the relatively strong US dollar. The dollar and commodities like oil and gold have an inverse relationship. It also declined after salvage operators managed to free the Ever Given ship at the Suez Canal. According to the Wall Street Journal, ships have already started moving slowly through the canal, with ship owners and exporters warning of higher prices. Oil prices will react to the latest oil inventories numbers from the American Petroleum Institute (API) and the upcoming OPEC+ meeting.
The EUR/USD pair declined to an intraday low of 1.1730, which is the lowest level in months. On the 30-minute chart, the pair has moved below the 25-day and 15-day exponential moving averages (EMA) while the Relative Strength Index (RSI) has declined to the oversold level. Also, the price is between the lower and middle lines of the Bollinger Bands. Therefore, the path of least resistance for the pair is lower.
The XBR/USD pair declined to an intraday low of 63.90, which is slightly below this week’s high of 65.30. On the hourly chart, the pair is slightly below the 38.2% Fibonacci retracement level. It has also formed a small head and shoulders pattern and is slightly below the 25-day moving average. The pair may keep falling ahead of the API and EIA inventories numbers.
The GBP/USD pair declined to an intraday low of 1.3750, which is substantially below the day’s high of 1.3846. On the hourly chart, the pair has formed a head and shoulders pattern. The awesome oscillator has moved below the neutral line while the price has moved below the moving average. Therefore, it may keep falling as bears target the next key support at 1.3700.