Will the euro hold its ground against the U.S. dollar as interest rates rise?

Will the euro hold its ground against the U.S. dollar as interest rates rise?

11.04.2022

Last weekend, the U.S. dollar strengthened against the weakening pound, causing the GBP/USD pair to fall by approximately 100 pips from 1.308 to 1.298.Partly due to the sharp rise in U.S. long-term bond yields, the downward trend continues without any sign of a rebound at the lower boundary of the daily chart’s descending channel. Since the pair has also broken below the recent low of 1.299 on the 4-hour chart, we need to carefully assess whether the decline in GBP/USD will continue.

European currencies traded sideways, with the EUR/USD pair ranging between 1.083 and 1.089. However, the euro emerged as the strongest currency during today’s Asian session, and the EUR/USD opened with a gap up of approximately 45 pips. Until the pair breaks above the 20-period moving average on the 4-hour chart and reaches the recent high at 1.093, we should carefully assess the direction of the EUR/USD.

Today’s schedule includes UK GDP, UK industrial production, and UK manufacturing output at 15:00 European time; Turkey’s current account balance and unemployment rate at 16:00; remarks by Bostic, President of the Atlanta Fed, along with remarks by Fed Governors Bowman and Waller at 22:30 U.S. time; and remarks by Evans, President of the Chicago Fed, at 25:40.Chicago Fed President Evans, and at 26:00, a US 3-year Treasury auction. We will be closely monitoring the strength and weakness of the US dollar and European currencies, which have seen significant price movements since the start of the week.