ForexLive European FX news wrap: Euro bounces around on German news, risk slumps yet again

Headlines:

• EUR/USD looks to keep the upside going with eyes on German debt brake reform
• Germany’s Greens party official calls for members not to vote for bill on spending plans
• Germany’s Greens co-leader says the goal is to come to an agreement
• Weekly update on interest rate expectations
• Bitcoin continues to hold the line at $80,000 for now
• ECB’s Kažimír: Inflation risks remain tilted to the upside
• Eurozone March Sentix investor confidence -2.9 vs -8.4 expected
• Germany January trade balance €16.0 billion vs €20.6 billion expected
• Germany January industrial production +2.0% vs +1.5% m/m expected
• SNB total sight deposits w.e. 7 March CHF 444.1 bn vs CHF 437.4 bn prior

Markets:

• JPY leads, USD and CAD lag on the day
• European equities lower; S&P 500 futures down 1.1%
• US 10-year yields down 5.8 bps to 4.247%
• Gold down 0.5% to $2,896.93
• WTI crude up 0.5% to $67.41
• Bitcoin up 2.4% to $82,629

It’s a modest start to the new week with some decent movements, despite it being quieter in terms of notable headlines.

US data is in focus again this week but we’re seeing broader markets stick with a more defensive risk mood right at the open in Europe. Regional indices quickly dipped lower after a positive start before deepening losses, with the DAX now seen down 0.9% on the day. For some context, the German benchmark index opened up by 0.6% to start the session.

The mood in Germany and the euro is not helped by some negative remarks from the Greens, saying that they will offer up some opposition to Merz’s debt brake reform and spending plans.

That also led to EUR/USD dipping from 1.0860 to 1.0830 before recovering some poise back to 1.0850 levels currently.

A softer dollar is also helping to keep things in check during the session. USD/JPY is down 0.7% to just under 147.00 with bond yields falling across the board in the US. The pair held around 147.40-50 levels early on in Europe but is now feeling heavy again amid a more defensive risk posture as well.

US futures being down over 1% isn’t really helping as tech shares are retreating after a late but unconvincing recovery last Friday.

In other markets, gold is also lagging in a dip back under $2,900 while Bitcoin came under pressure during the weekend but continues to hold the line at $80,000 for now at least.

It’s now over to US trading to make do with the risk mood as the focus turns to key US data in the days ahead.

This article was written by Justin Low at www.forexlive.com.