Gold 1730,765
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EURUSD 1,1841
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DJIA 32275,50
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OIL.WTI 58,105
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DAX 14627,50
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Right now the pair is trading near 1.19. Before you read the text below, answer the question. Where do you think the EUR/USD is going, 5 figures up or 5 figures down? You can also answer the second, no less interesting question “why exactly”?
EURUSD
What is the first thing investors pay attention to when they look at the EUR/USD pair? Of course the ever-increasing yield spread between 10-year US and German government bonds. It is already as high as 2% (200 basis points).
In the meantime the EURO is still rather comfortable. It is resilient and does not want to fall too much. However the longer this spread stays at current levels, the more pressure on the EUR will be put on it.
Imagine this. You are a big investor and you want to invest your spare money for the next 10 years. And you are thinking, take the dollar and American Treasuries, getting a 1.7% p.a.. Or enter Euro bonds at minus 0.3%? The answer is obvious. Very few people want to invest in European currencies.
Not enough of that. The US economy is recovering much faster than the European economy. And the United States is also ahead in vaccination rates.
So why isn’t the EURO falling? There is only one answer. Because everyone sees it and waits for it. When everyone in the market is waiting for the same thing to happen, it can happen much later than most people think. That is, once many of us get tired of waiting, the pair can go towards the 1.15 level in just a few trading sessions.
08.00 UK consumer price index for February
09.30 German PMI for March
10.00 EU Manufacturing Activity Index for March
10.30 UK PMI for March
13.30 US Durable Goods Orders for February
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