Forex - EUR/USD Flows: Strong US durables goods orders underpin firm USD tone, but...


 12:55 (GMT) 25 Apr

  [Forex Flows]

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EUR/USD Flows: Strong US durables goods orders underpin firm USD tone, but... (0101-KVWZ-C01)

Strong US durable goods orders in March were mainly transport related, but are still supportive for an already strong USD after yesterday's new low for the year in EUR/USD. Even so, at this point it is still noticeable that EUR/USD has fallen without any real impetus from yield spreads, with US yields still struggling to move significantly above 2.5%.

EUR/USD Flows: Strong US durables goods orders underpin firm USD tone, but... (0101-KVWZ-C02)

While a longer term view can still justify EUR weakness, as the rise in the EUR in early 2017 came without any real support from spreads, we would expect some rise in US yields to be necessary if the USD's recent strength is to extend much further. This may well come from tomorrow's GDP data, but with positioning significantly long USD against the lower yielders and Golden Week coming up in Japan, there risks could be more on the downside from a weak GDP number than on the upside from a strong one.


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