Anna Zaitseva, analyst, FINAM Group
On Wednesday, March 3, EUR / USD is down 0.08% to trade at 1.2080, while the DXY dollar is up 0.07% to hit 90.858. The previous session turned out to be very volatile: during the day, the quotes of the main currency pair fell below the level of 1.2000, but ended trading with an increase of 0.28% to 1.20836, and the DXY index rose to 91.405, but finished with a decrease of 0.27% to the level of 90.79.
US Treasury yields fell slightly after a sharp jump last week, which halted the weakening of conventionally risky currencies, including the euro, against the dollar.
At the same time, if the ECB activates purchases of government bonds in order to prevent an increase in market rates in the absence of similar actions on the part of the FRS, further growth in the yields of US government securities can be expected. In turn, this will help strengthen the US dollar. As we noted earlier, the Fed does not see any risks in the recent increase in UST yields and has not yet announced the need to hinder this process with monetary policy instruments.
It should also be said that yesterday’s strengthening of the euro was not prevented by weak data on retail sales in Germany. As a result of maintaining strict quarantine restrictions in the country, the indicator decreased by 8.7% (y / y) in January against an increase of 2.3% (y / y) a month earlier, while analysts had expected an increase of 1.3% (y / y). d).
In addition, in February, the number of unemployed in Germany increased by 9 thousand people in comparison with a decrease of 37 thousand in January and the consensus forecast of -13 thousand.However, this did not affect the final unemployment rate – its value remained at the level of 6 %, as analysts expected. It should be noted that the lockdown in Germany will continue until March 28, which will negatively affect the macroeconomic indicators for the entire first quarter.
Also yesterday there were data on inflation in the eurozone. According to preliminary estimates, in February the value of the indicator was + 0.9% (y / y), which coincided with the previous value and the consensus forecast.
In the United States yesterday was published data on the index of economic optimism from IBD / TIPP. So, in March, the indicator rose by 3.5 pp to 55.4 points, which was the highest value since February 2020.
Today it will be necessary to follow the publication in the eurozone, Germany and the United States of the final February data on PMIs in the services sector. In addition, the US will release data on the change in employment from the ADP and the index of business activity in the non-manufacturing sector from ISM for February.
The EUR / USD pair tested the 1.2000 level, but held above this mark. Stochastic lines are located near the oversold zone in a favorable position for purchases, and therefore, in the short term, a corrective growth in the instrument is possible.
This information is not investment advice.