Listen to the market mood for the EURUSD currency pair in the coming session:
The Euro is weak with many downward forces dragging it down: The major euro economies are struggling with weak German Growth and falling French manufacturing data. The ECB’s main interest rates are at historically low levels, German 10-year bond yields are only paying minus 0.40bps and the EU is still to agree on a trade deal with the UK. Last week institutional net short positions increased once more with the COT report showing 86K contracts short.
The USD, by contrast, is in a much stronger position. The US 10-year yield is at 1.58% (around 200bps more than Germany’s rate of -40bps) and Fed Chair Powell says the economy is in a ‘very good place’.
Therefore, expect EURUSD sellers at pullbacks for the medium term.
Risks to this outlook
Any positive eurozone growth news or negative USD news on the US economy.