The American dollar had a good record on Tuesday, advancing against its major counterparts on the back of soaring government bond yields. After a long weekend, the 10-year US Treasury yield soared to a fresh two-year high of 1.856%, while the yield on the 2-year bond reached 1.06% – both rising on the back of investors’ fears the US Federal Reserve will have to accelerate the pace of its tightening even further.
The US central bank is having its first meeting of the year next week and is not expected to change rates or the rest of the monetary policy at that meeting, however, investors will be looking for confirmation that the first-rate hike will take place in March. The pace at which policymakers will raise rates is critical, as the latest dot-plot hinted at three hikes in 2022. A move for a fourth has begun sounding out loud as the economy grows at a solid pace while the employment sector is slowly but steadily approaching pre-pandemic levels.
The EURUSD pair broke the 1.1350 mark and is ready to attack the 1.1300 price support line to solidify the bearish momentum. We remain Bearish on the Euro for today.
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