After news that the greenback suffered its worst quarterly performance in more than seven years, the US Dollar managed to recover lost ground. But that was recovery was only with the assistance of a rise in yields on US Treasury instruments to a 7-week high. Indications that the European Central Bank was on the verge of pulling back its massive liquidity injection had helped push the EUR/USD to its highest level in more than year.
As reported at 10:52 am (BST) in London, the EUR/USD was trading at $1.1375, down 0.45%; the pair earlier hit a session trough of $1.13728 while the peak was at $1.14297. The USD/JPY was trading at 112.882 yen, a gain of 0.42%; the pair traded from a high of 112.946 Yen to a low of 111.853 Yen.
However, analysts point out that generally higher interest rates in the market are favoring the US Dollar. For example, while Germany’s 10-year bunds surged more than 20 bp last week, that’s still significantly less than US yields, and the yields on the Japanese Yen are lower still. What is also significant say currency strategists is that US yields are following those in Europe and Asia.