EUR/USD Futures: Greenback Recovers amid Hawkish Fed, Upbeat NFP

  • The 2-year yield in the US is nearly 2.5 percent for the first time since early 2019. 
  • The dollar continues to rise despite the mixed note in rates.
  • The key focus for market participants is interest rate hikes in the United States and Europe’s ban on Russian gas.

Future prices for EUR/USD (6E1) remain strongly influenced by US Treasury yields and geopolitics.

The greenback got off to a strong start this week as Treasury rates jumped in anticipation of a flurry of interest rate rises in the United States. Still, speculation of Europe restricting Russian gas kept the Euro under control.

Hawkish Fed

After Friday’s strong March payrolls data, the US Federal Reserve is expected to boost rates even more.

Fed funds futures are pricing at an almost 4/5 probability of a 50-basis-point rise next month, and two-year rates are just over 2.5 percent.

Politics weigh in on EUR

Concerns about economic damage from the Ukraine conflict weighed on the Euro, which was parked at $1.1047, not far from its almost two-year low of $1.0806.

After Ukraine accused Russian soldiers of war crimes, Germany suggested on Sunday that the West would agree to put further sanctions on Russia in the following days.

If the EU takes action to halt Russian gas exports, the EUR might fall much more.

EUR/USD futures daily open interest

The EUR/USD price fell on Friday while the open interest sharply rose. It indicates that the bias is strongly bearish. 

EUR/USD futures daily open interest
EUR/USD futures daily open interest

What’s next for EUR/USD futures?

Several Fed officials are scheduled to appear at public events this week, perhaps providing additional hawkish signals, and the minutes of the most recent policy meeting are expected on Wednesday.

EUR strength is still based on expectations that the ECB would begin its raising cycle before the end of the year. At the same time, higher German rates, rising inflation, and a reasonable pace of economic recovery are all important factors.

EUR/USD futures technical analysis: Bears dominating the market

EUR/USD futures 4-hour chart
EUR/USD futures 4-hour chart

The EUR/USD futures are maintaining a downtrend. The 4-hour chart shows a bearish bias. The pair remains below the key moving averages on the chart. However, the moving averages show no significant trend bias. We can see the pair has a sell zone at 1.1180-99, while the buy zone lies around 1.0980-97.