Traders’ Anxiety

The Euro against the US dollar value has gone higher by some 0.13% at 1.0902, and it has moved rapidly between 1.0882 and 1.0908 in a somewhat narrow space as the financial markets were consolidating on an hourly basis. Traders are anxiously waiting for directions from the European Central Bank as the US dollar has been having a bad time following its tumble overnight between Wednesday and Thursday.

EUR/USD price chart. Source TradingView

There was a halt in advance of the US bond yield and gave some measure of respite to Euro that had been beaten up. There was a sharp drop of 2.4 basis points to arrive at 2.697% for the US ten-year bond yield after it was able to rise to a height of 2.836% in the course of early trading on Tuesday while it was still waiting for the publication of the inflation records from the US. The inflation report finally came out missing the mark in the central reading, and it weighed heavily on the US dollar.

The EUR/USD currency pair was on the rising path of 0.54% on Wednesday, although the US dollar dropped against the British pound sterling. This consequently led the US dollar index, which gauges the dollar in relation to six currency pairs, to trade between the range of 99.663 and 99.884 in the Asian market following its 0.52% drop that occurred overnight.

Focus on the European Central Bank

The financial market is bracing up for clues that the European Central Bank might want to draw a line beneath its easing plan that’s on the quantitative phase in the second quarter of this year instead of the third quarter, as many speculate. But financial analysts with Westpac are of the strong opinion that the Governing Council of the European Central Bank would put a hold on its major interest rates at the next meeting of the Council coming up this April. Deposit facilities are currently at -0.5%.

According to them, the bank’s buying of bonds will be proper to be kept up till June, but as things are, it might end before then. The attention of most people will be on the press briefing to be granted by the bank’s president, Christine Lagarde. The market would also be watching out for any form of guidance to be offered based on how long following the stoppage of QE, rates are likely to start rising, considering the force of inflation, which is way above-speculated targets, and slow economic growth as a result of high gas prices.