Euro and pound sagged last Friday when the yield on 10-year US bonds increased again.
But in the afternoon, balance returned in the market because Treasuries retreated after jumping noticeably in the morning. Aside from that, demand for the US dollar remained relatively low due to the lack of important economic data from the United States.
Today though, EUR / USD is still under the control of the bears because the market opened with a small but noticeable gap downwards. This suggests that a consolidation below 1.1875 will push the price down even lower, perhaps towards 1.1835 and 1.1790. But if the bulls manage to bring the quote back to 1.1935, EUR / USD could climb towards the 20th figure, where a break above could lead to a further increase towards 1.2050 and 1.2110.
On a different note, Reuters revealed that Europeans have become less confident in AstraZeneca's COVID-19 vaccine. This is mainly due to news of complications from its use.
Confidence fell most strongly in France and Germany, followed by Italy and Spain. More specifically, the poll indicated that around 55% of Germans and 61% of French respondents consider AstraZeneca to be unsafe. Meanwhile, 36% of Italians and 38% of Spanish respondents view the drug as risky.
The survey is based on recent rumors that the AstraZeneca vaccine caused blood clots in the brain after its use. But the European Medicines Agency (EMA) said the drug is safe and effective, and was not associated with venous sinus thrombosis.
Europeans don't have many options for vaccine. Therefore, if they abandon AstraZeneca, it would seriously impact the bloc's rate of vaccination, which would accordingly lead to the delay of the lifting of quarantine restrictions. Such would also affect the rate of economic growth this year.
As for the United States, immunization is more advanced, thanks to the recently-approved $ 1.9 trillion stimulus bill. With it, Americans are also given additional checks worth $ 1,400, which helps not only the population, but also the US economy.
Last week, European Central Bank President Christine Lagarde also addressed the issue on additional financial stimulus. She warned lawmakers about the risks of a slow rollout of the € 750 billion EU recovery fund, and said that the actions of the ECB alone are not enough for an effective economic recovery. Therefore, there is a need for further monetary and fiscal support.
Going back to vaccinations, the European Union is reported to be planning a ban on exports of COVID-19 vaccines. Apparently, they are tired of asking for more supply, so they decided to take action. A senior official said the European Commission will discuss the move this week, and will most likely impose the ban until AstraZeneca fulfills its obligations to EU countries. Of course, this would seriously affect the relations between Europe and the UK, but Brussels is obviously set on banning vaccine exports to London until the bloc receives enough supply.
With regards to macro statistics, reports from Germany, although very positive, did not lead in a strong rise in EUR / USD. Nevertheless, PPI increased for three consecutive months, jumping by 1.9% year-on-year in February 2021. The core non-energy index also rose by 1.4%, while energy prices climbed by 3.7%.
As for Italy, reports reveal that construction volume rose 4.5% this January, after a massive 4.2% fall last December. Then, on a yearly basis, it decreased by 1.5%.
GBP / USD
Pound continues to trade downwards and is now one step away from forming a strong bearish trend. Obviously, bulls are very weak, but they need to try preventing the breakdown of the 38th figure. This is because dropping below the level will result in a strong collapse towards 1.3740 and 1.3680, which will begin the bear market. But if the bulls manage to bring the pound back to 1.3800, then most likely GBP / USD will climb again to 1.4000.
With regards to macro statistics, a report revealed that fiscal deficit in the UK hit its highest level this February, reaching a massive £ 19.1 billion from £ 17.6 billion a month earlier. In a yearly basis, it widened sharply from £ 228.2 billion to £ 278.8 billion.