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  • EUR/USD dropped nearly 100 pips after climbing above 1.1900.
  • US Dollar Index is pushing higher toward 93.00.
  • 10-year US Treasury bond yield touched its highest level since March.

The EUR/USD pair rose to its highest level since early September at 1.1920 on Monday but made a sharp U-turn during the American trading hours and slumped to a daily low of 1.1816. As of writing, the pair was down 0.4% on a daily basis at 1.1822.

DXY gains traction on rising T-bond yields

Earlier in the day, the shared currency capitalized on the risk rally after Pfizer announced that its experimental coronavirus vaccine was “more than 90% effective” in phase-three trials. Major European equity indexes soared higher on this development and now remain on track to close more than 5% higher on Monday. 

Reflecting the risk-on market atmosphere, Wall Street’s three main indexes, S&P 500, Dow Jones Industrial Average and Nasdaq Composite, hit new all-time highs after the opening bell.

Moreover, the 10-year and the 30-year US Treasury bond yields surged to their highest level since early March and helped the greenback find demand. Additionally, the 2-10 year yield curve is now the steepest since February 2018 at 77.4 basis points. At the moment, the 10-year reference is up 16.6% on the day at 0.953 and the US Dollar Index (DXY) is rising 0.65% at 92.84.

On Tuesday, ZEW Survey – Economic Sentiment for the eurozone and Germany will be featured in the European economic docket. Later in the day, the NFIB Business Optimism Index from the US will be looked upon for fresh catalysts.

Technical levels to watch for