Search ForexCrunch
  • EUR/USD is showing resilience amid broad-based risk aversion. 
  • The dollar is struggling likely due to the losses in the treasury yields. 
  • The US 10-year yield dropped to one-month lows in Asia. 
  • Geopolitical tensions are likely to overshadow macro data releases. 

EUR/USD is hovering near 1.1165, as the US dollar is struggling to gain ground amid broad-based risk aversion and the losses in the treasury yields.

The tensions between the US and Iran escalated over the weekend with Iran’s supreme leader Ayatollah Ali Khamenei promising ‘severe revenge’ for the US killing of Iranian general Soleimani. The nation also declared that it will no longer abide by any of the restrictions imposed by the 2015 nuclear deal.

Further, President Trump warned of retaliation if Iran attacks US personnel or assets.

The markets, therefore, have turned risk-averse, boosting demand for the classic anti-risk assets like US treasuries, gold, and Japanese yen.

The yield on the US 10-year Treasury note fell to a one-month low of 1.757% in Asia and is currently seen at 1.777% – down 10 basis points on the day.

Meanwhile, Asian stocks are reporting losses with Japan’s Nikkei index shedding 470 points at press time. The futures on the S&P 500 are also down 0.33%. Further, the Dax futures are down 0.63%.

As a result, the US yields, therefore, are likely to remain under pressure in Europe. The EUR is backed by a current account surplus and most Eurozone nations’ government bonds are offering a negative yield. The markets, therefore, could treat the single currency as an anti-risk asset.

On the data front, the German retail sales for November and final PMI indices for December are due for release. These data sets, however, could be overshadowed by geopolitical developments.

Technical levels