10:48 AM · 3 October 2023

Chart of the day - EURUSD (03.10.2023)

EURUSD has been under selling pressure for over two months now, with the EURUSD exchange rate currently entering levels last seen at the end of 2022. The US dollar has recently been gaining in value. This situation has been driven by the bond sell-off, which has led to a significant increase in US Treasury bond yields. The 10-year yields are approaching the 4.70% level, surpassing recent local highs. Following hawkish comments from Fed members, the dollar continued to strengthen, and investors are starting to price in the possibility of maintaining higher interest rates for an extended period.

On a chart comparing bond pricing with the US dollar index there is still significant potential for further USD (USDIDX) gains. Bond yields have broken through recent highs, and the dollar is following the same trajectory, albeit with a slight lag.

The EURUSD exchange rate has breached recent lows and is approaching the next support level at 1.037. Today, the dollar is once again one of the strongest currencies among developed economies.

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