Cable drew strength from news that shops, hairdressers and gyms reopened in the UK. The market also tapped into a wave of upbeat sentiment due to acceleration of vaccination rollouts in France, Germany and Italy.
The euro and the pound appreciated against the dollar on the back of rising UST yields. On Tuesday, a downward correction followed in Asia for dollar pairs, as 10-year bond yields jumped to 1.70%.
Today’s macro agenda (GMT 3)
- 12:00 Germany and Eurozone: ZEW economic sentiment and current conditions (April)
- 15:30 US: CPI report (March)
Major currencies are trading in the red today except for sterling. The yen and the franc are showing the steepest declines. The dollar rebounded after 10-year UST yields retraced to 1.70%. At the time of writing, the euro was trading at 1.1898. The intraday low stands at 1.1883.
The euro will remain under pressure if bond prices continue to fall. When investors sell bonds, the dollar strengthens. Buyers will not be able to withstand support from euro cross pairs for long amid rising yields. To tap back into a rally above 1.1930, the price action will need to break out of the 1.1905 level as quickly as possible. Then it will be easier to breach 1.1920 and retrace to new highs. Support is still at 1.1852. The key macro data points to watch for today include US inflation and the ZEW index in Germany.