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Euro Falls on Rising US-German Yield Spread and Weak German IFO

April 24, 2019 at 16:40 by Simon Mugo

Assorted stacks of euro coins with euro banknotesThe euro today fell for the second straight session against the US dollar as the German business climate deteriorated more than expected. The EUR/USD currency pair’s decline was further accelerated by the risk-off market sentiment triggered by falling equity indices earlier today.

The EUR/USD currency pair today fell from a session high of 1.1224 to hit a low of 1.1180 in the early American session before heading lower at the time of writing.

The currency pair opened today’s session with a bearish bias and was in the red for most of the Asian session. The pair rallied briefly in the early European session before dropping lower following the release of the weak German IFO business climate data. The IFO business climate print came in at 99.2 versus the expected 99.9 figure, while the expectations print was recorded at 95.2 as compared to the consensus estimate of 96.0. The pair’s decline was further accelerated by the falling 10-year German bund yields, which slipped into negative territory to create a 254 basis point gap with 10-year US Treasury yields.

The single currency was also overwhelmed by the much stronger greenback as tracked by the US Dollar Index, which hit a high of 97.84 today. The likelihood of President Donald Trump imposing new tariffs on EU exports further weighed on the currency pair.

The currency pair’s future performance is likely to be affected by tomorrow’s US durable goods orders and geopolitical events given the empty European docket.

The EUR/USD currency pair was trading at 1.1161 as at 16:39 GMT having fallen from a high of 1.1224. The EUR/JPY currency pair was trading at 124.90 having dropped from a high of 125.59.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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