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EUR/USD Erases Tuesday’s Rally on Wednesday

January 13, 2021 (Last updated on January 14, 2021) by

EUR/USD dropped today, reversing yesterday’s rally, which itself erased Monday’s decline. Market analysts explained today’s drop by rising US Treasury yields as well as hopes for fiscal stimulus and economic recovery in the United States. All of Wednesday’s macroeconomic reports released in the USA matched expectations but had little impact on moves of the currency pair.

US CPI rose by 0.4% in December, matching forecasts. The index was up by 0.2% in the previous month. (Event A on the chart.)

Crude oil inventories shrank by 3.2 million barrels last week, in line with market expectations, but were above the five-year average for this time of year. The reserves dropped by 8.0 million barrels the week before. Total motor gasoline inventories swelled by 4.4 million barrels and were also above the five-year average. (Event B on the chart.)

Treasury budget deficit narrowed from $145.3 billion in November to $143.6 billion in December. That is compared with the median forecast of a $144.5 billion deficit. (Event C on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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