Main currency pair drops below key support and trades at lowest level since January 2017
Concerns over stability of global markets as well as the condition of the global economy triggered another wave of USD appreciation. It becomes evident that investors start to look for safe havens with US bond prices jumping significantly higher. Bond prices gain and foregin demand for USD increases triggering reversal in yield-USD correlation. 10-year US yield pulled back to 2.8% area as demand for bonds remains high.
The US CPI report for April released yesterday showed that while price growth decelerated, it still remains high and exceeds expectations of economists. This in turn boosts odds for big rate hikes at the coming FOMC meeting.
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EURUSD dropped to the lowest level since January 2017. Source: xStation5
