Should we keep an eye on the balance of power between the euro and the U.S. dollar?

Should we keep an eye on the balance of power between the euro and the U.S. dollar?

12.04.2021

Last weekend, U.S. stock prices rose toward the close, resulting in a market environment characterized by rising stocks, a weaker dollar, and flat interest rates. Crude oil also saw little movement, trading at $59.30, just shy of $60, while gold, which had rebounded earlier, fell during today’s Asian trading session and has returned to the $1,730 range. Trading volume remains light as the market as a whole searches for direction.

The foreign exchange market opened without a gap, with cross-yen pairs coming under selling pressure, resulting in a general trend toward yen buying. USD/JPY is currently trading around 109.5. From a technical perspective, if it closes below the 20-day moving average (MA) of 109.3, there is a risk that the market could shift from a corrective decline to a full-fledged downtrend, so caution is warranted. However, the euro is weaker than the dollar; EUR/USD has fallen to 1.18 and is testing lower levels.

Today’s schedule includes Turkey’s current account balance and unemployment rate at 4:00 PM, Eurozone retail sales at 6:00 PM, remarks by MPC member Tenreyro of the UK at 10:00 PM, a U.S. 3-year Treasury auction at 12:30 AM, and a U.S. 10-year Treasury auction at 2:00 AM.This week, with the New Zealand policy rate and the Eurozone trade balance on the schedule, we will be closely monitoring which direction the US dollar and European currencies will take.