For brief moment last week, it looked like higher inflation and the scope for rate hikes could drive a bid in the euro, especially as it rose above the March highs.
Yet four days later, it's right back in the doldrums and threatening the third-worst close since May 2020. That's a poor signal going forward and if it gets through 1.0900, there isn't much standing in the way of a return to the year-to-date low of 1.0806.
At the moment, the broader deterioration in risk assets is harming this pair and lifting the US dollar. The trigger today were comments from the Fed's Brainard that suggested the possibility of a 50 basis point hike in May. US 10-year Treasury yields are up 14 bps to 2.55% That's a large spread of benchmark German bunds, which pay 0.61%.
