The Euro fails to stem its losses

The euro is trying to reduce its losses that have lasted for about a week against the US dollar, and it declines by 0.04% after 9:00 a.m. GMT.

The euro failed to stop its losses today despite the larger-than-expected rise to the highest levels in two years in confidence in Germany and the Eurozone, as US Treasury yields continue to rise to their highest levels this year, with pessimism about the possibility of an interest rate cut in June continuing to hinder the currency’s progress. Consolidated.

Today, we saw the April reading of the ZEW Economic Sentiment Index for Germany and the Eurozone at 42.9 and 43.9, which were significantly higher than expectations at 35.9 and 37.8, respectively, while these readings represent the highest levels since February of 2022.

This surprising positive sentiment came with hope that the German economy could recover during the next six months, according to ZEW Financial Market Survey as well.

In contrast to this positive atmosphere, we find parts of pessimism about the possibility of the beginning of the easing path of monetary policy by the Federal Reserve at the beginning of the second half. The probability of cutting rates by 25 basis points is still only about 22% after exceeding 60% last month, according to the CME FedWatch Tool.

This pessimism was reflected in a further rise in US Treasury bond yields to their highest levels this year, which constitutes the most important obstacles to the euro regaining its strength, in addition to geopolitical concerns and the specter of looming wars coming from the Middle East.

The yield on ten-year bonds reached 4.649% today and slightly higher than that yesterday, while German bond yields for the same term stabilized near the level of 2.449% as well, within sideways trading extending over two months.