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Euro Falls on Weak German Yields, Rallies as US 10-Year Yields Drop

May 31, 2019 at 16:51 by Simon Mugo

10 and 20 eurocent coins and 10 and 20 euro notesThe euro today fell against the US dollar during the Asian session driven by investor sentiment and the greenback’s rally amid global trade tensions. However, the EUR/USD currency pair recovered and rallied higher as the US 10-year Treasury yields fell to record lows driven by rising US bond prices as investors sought safety in them.

The EUR/USD currency pair today rallied from a low of 1.1124 in the Asian session to a high of 1.1179 in the early American session before retracing some of its gains.

The currency pair opened today’s session with a bearish bias as German 10-year bond yields slide to a record low of -0.205%, which was last seen in July 2016. The release of disappointing German retail sales data for April by the Federal Statistical Office also contributed to the pair’s decline. German retail sales fell 2% in April versus the expected 0.4% expansion. The currency pair had a muted reaction to the weak Italian Q1 GDP data released by Istat, which showed a 0.1% decline instead of the expected 0.1% increase. The pair then rallied despite the release of weak German preliminary CPI data for May later in the session.

The pair’s rally today was largely driven by US dollar dynamics as US Dollar Index dropped due to the falling US 10-year Treasury yields, which today dropped below the September 2017 low of 2.17%. The pair dropped as the London session closed, but quickly recovered.

The currency pairs performance over the upcoming weekend is likely to be influenced by geopolitical headlines.

The EUR/USD currency pair was trading at 1.1160 as at 16:51 GMT having rallied from a low of 1.1124. The EUR/JPY currency pair was trading at 121.14 having dropped from a high of 121.84.

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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