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Apr 12 - 11:55 AM

EUR/USD - COMMENT-Grim Influences Give EUR/USD Shorts Confidence 1.0500 Will Be Tested

By Christopher Romano  —  Apr 12 - 09:45 AM

EUR/USD erased meager overnight gains and turned lower Friday, with a growing list of bearish influences increasing the probability support near 1.0500 will come into play.

China's March trade balance indicated a sharp reduction in exports and a drop in imports, which fueled concerns that global economic growth, which the euro zone depends on, remains unstable.

The prospect of a worsening economy in the euro zone could lead the ECB to adopt a more dovish monetary policy going forward.

Potentially rising tensions in the middle east have investors seeking out safer assets.

U.S.
import price increases in March
could add to investor views the Fed may delay rate cuts.

Those factors have safe havens such as the dollar, gold and U.S. Treasuries gaining while riskier assets take big hits.

The potential for the ECB to cut ahead of and more than the Fed increased the dollar's yield advantage over the euro.
German-U.S.
2-year spreads US2DE2=RR widened and neared the base of the range they've been in since September.

Should geopolitical tensions flare-up and spreads break the range base, EUR/USD's slide could intensify as investors opt for the safety of the U.S.

EUR/USD shorts could then have the confidence to push the pair towards 1.0450/1.0500.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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