The euro recovers while stock markets throughout the world continue to fall.
The EUR/USD pair has risen strongly from its monthly lows to its highest level since Thursday.
As risk aversion fuels demand for safe assets, US yields plummet.
The EUR/USD swiftly rallied from its lowest point since April, around 1.1770, to a new daily high of 1.1825. As global markets and commodities tumble rapidly, it is hovering around 1.1815, marginally positive for the day after a reversal.
Volatility is usually minimal at the start of the week; however, that is not the case today. The significant drop in global markets set off a chain reaction in the currency market. The yen, followed by the euro and the Swiss franc, has had the strongest performer among the G10 currencies thus far.
The euro strongly rebounded after the start of the American session. The EUR/USD exchange rate increased from 1.1760 to 1.1820, peaking at 1.1824, the highest level since Thursday. The pair is back in the recent range of 1.1770 and 1.1850, just below the 20-day moving average, after recovering from three-month lows.
The Dow Jones is down 2.25 percent, while the Nasdaq is down 1.68 percent. In Europe, the major indices have lost an average of 3%. At the same time, the 10-year yield in the United States fell below 1.20 percent, its lowest level since mid-February.
The spotlight has shifted to equities and risk sentiment. On Thursday, the European Central Bank will convene, which will be the most important event of the week. The central bank could offer “a very dovish hold,” according to analysts at Brown Brother Harriman. Rates are not likely to change. It will be the first meeting following the announcement of the new plan./n
