IFX Market Report: Wednesday 7th April 2021

The Euro has continued to make advances on the Dollar as the pair targets the 1.19 mark. This is the second session of gains for the Single Currency against the Greenback after struggling to gain much momentum in Q1 due to the EU’s disastrous handling of their COVID-19 roll out and the economical despair the old continent endured due to strict lockdown measures. It is important to note that while the Euro is experiencing some demand, its Dollar weakness that is the main driving the pairs move. Tuesday’s spike is a result of lower US yields, “which has in turn morphed into further selling pressure around the dollar. In fact, yields of the US 10-year note breach the 1.70% level and challenge the area of daily lows.”

Also helping the Euro this week has been better than expected economic data. The EU published the April Sentix Investor Confidence, coming out at 13.1, much better than the 7.5 expected. Unfortunately, employment remains an issue with the figure for February coming in at 8.3% , widely missing expectations. Comments from ECB policymaker and Governor of the Bank of Belgium Pierre Wunsunsc yesterday evening also helped boost EURUSD, directly helping the pair gain 0.22 %. Wunsunsc noted that "ECB is fine with financing conditions as they are… if the economy improves strongly it will have to mean some tightening at some point… if economy clearly deteriorates, ECB could extend PEPP beyond March 2022”. He concluded his speech making a promise that the ECB will doing everything possible to “keep financing conditions stable”.

After low trading activity because of the British bank holiday on Monday, GBPUSD opened Tuesday at 1.3915 but markets indicated investors are behaving somewhat bearish toward Sterling as Boris’ lowdown looms. The pair came under tough pressure session and finished the day at 1.3858. When /if Boris’ road map goes ahead it will more than likely induce a significant spike in the pound. Equally, if anything were to delay the plans, Sterling would certainly depreciate.

While still trading high, GBPEUR made sizeable losses on Tuesday. The pair opened at 1.1782 and closed and 1.1705.

EURUSD opened the Tuesday session at 1.1811 and manged to close at 1.1838.

On the data front, from 08:15 there are PMI releases from Spain, Italy, Germany, UK and the Eurozone.7 From the US in the afternoon starting at 12:00 there MBA Mortgage Applications, Balance of Trade for February, and Fed member Charles Evans will be speaking at 14:00.

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