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Mar 11 - 04:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Shrugs Off Dovish ECB, Dollar's Haven Bid Dims

By Randolph Donney  —  Mar 11 - 02:39 PM

The dollar fell broadly on Thursday as improving risk appetite dimmed its safe-haven allure, helping EUR/USD overcome an initial stumble on news that the ECB would step up buying under its pandemic emergency purchases programme (PEPP) to counter rising interest rates nL1N2L90DW.

The ECB move came largely as expected, helping to limit reaction, as did President Christine Lagarde's comment that risks had become more balanced nL1N2L91TP.

The lack of drama surrounding Thursday's slightly disappointing 30-year Treasury auction nL1N2L92IS, combined with a similar result in a 10-year notes sale and tame core U.S. CPI on Wednesday, tamped down recent inflation anxiety, helping to send the S&P 500 to record highs and bolstering assets globally at the dollar's expense.

EUR/USD shrugged off decent U.S. jobless claims data nAQN03WK42 and a bounce in longer-term Treasury yields ahead of the 30-year auction.
Prices have cleared the 10-day moving average that had capped it before the ECB meeting, now up to 1.1981.
A close above the 10-DMA would shift the focus to the 100-DMA at 1.2040.

But the focus may shift back to rising Treasury yields, particularly versus other government bonds, if the Fed next week demurs on following in the ECB's yield containment footsteps.

Sterling advanced well above the 21-day moving average and not far from last week's 1.4017 high, riding the post-ECB dollar drop.

USD/JPY lingered near this week's 108.28 lows, about flat on the day as the yen also struggled amid risk-on trading.
This is the third straight day with a long candle wick, as overbought conditions following a 4.1% 10-day advance get worked off.
Unless price close below Monday's pivotal 108.28 low on EBS this week's dips will just be a correction nL1N2L921M.

President Joe Biden signed the $1.9 trln relief bill today, with $1,400 stimulus checks expected to hit some consumers' accounts as soon as this weekend.

U.S.
February retail sales are out Tuesday.
January's 5.4% month-on-month rise won't be reprised until March, when the new stimulus hits.
The FOMC Wednesday is eyed for any pushback on rising rates.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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