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03.03.202111:28 Ανάλυση και κριτικές Forex: EUR/USD and AUD/USD: Risk assets rose after a sharp increase in US Treasuries. Meanwhile, Biden and Merkel are considering lifting quarantine measures. Australia's economy is recovering very rapidly.

Finally, risk assets grew amid the continued increase of Treasury yield in the US. Expectations that many developed countries will begin phasing out quarantine measures added support to these assets as well.

Exchange Rates 03.03.2021 analysis

In fact, yesterday, US President Joe Biden made a number of statements on COVID-19 and its vaccines. According to him, supply will finally become sufficient in the near future, therefore, by the end of May, vaccination will reach a level at which schools and other educational institutions can be opened. He also said Merck will help synthesize Johnson & Johnson's recently-approved vaccine.

But despite the acceleration in production, vaccination would still last until summer. Nevertheless, Biden's statements have raised expectations that the US will emerge from the pandemic soon.

That said, mandatory wearing of masks has been lifted in Texas yesterday. The limitation on the number of people that can be in one room at the same time has also been canceled. Governors of Michigan, Mississippi and Louisiana also eased restrictions on restaurants and other food establishments.

Exchange Rates 03.03.2021 analysis

Going back to Treasury yields, its continued rise no longer provides support to the US dollar. Finally, risk assets began to rise, as it should have been amid growth in bond yields.

In another note, lack of data on the US economy also affected the dollar's rate. But today, reports on US employment and service sector will be released, so pressure could return on EUR / USD and GBP / USD.

Exchange Rates 03.03.2021 analysis

Therefore, in the EUR / USD pair, bulls need to push the quote above the 21st figure in order to set off a continued rise towards 1.2140 and 1.2190. But if the euro returns below 1.2040, EUR / USD will collapse to 1.1990.

Yesterday, it was reported that the unemployment rate in Germany has increased, contrary to the forecasts of economists who expected it to decline. But given the fact that the German economy is currently recovering, these figures are unlikely to be of serious importance. Most probably, the rise in unemployment is due to the resumption of quarantine measures in the country, which severely disrupted economic activity. Since January 2021, the number of unemployed has grown by 9,000 and reached 2.752 million. The unemployment rate was 6.0%.

Clearly, some sectors are still feeling the effects of the lockdown. But overall employment, in reality, is recovering. Nevertheless, the media says Chancellor Angela Merkel is likely to extend the measures until March 28. She is also taking a more cautious approach, therefore, she will meet with the leaders of the member states to develop a comprehensive strategy for opening the economy. After this meeting, it will be clear to what extent the quarantine measures will be extended.

Exchange Rates 03.03.2021 analysis

AUD

According to the Bureau of Statistics, Australia's GDP has grown by 3.1% in the 4th quarter, which is much better than what economists had expected. But on a yearly basis, it fell by 1.1%, although this is still better than the forecasts.

The growth is most probably due to the increase in Service PMI, which jumped to 53.4 points. Although the figure is still below the pre-crisis level, all sub-indices have nevertheless shown steady growth. In fact, the number of jobs have risen to record levels, and business sentiment is at its strongest in more than two years. All this suggests that the Australian economy will continue to recover at a rapid pace as exports grow, which are now in trouble due to restrictions in other countries.

Exchange Rates 03.03.2021 analysis

Unsurprisingly, the Australian construction sector also continued to grow this February, hitting 57.4 points amid recovery in all four sectors.

As for the AUD/USD pair, a break above 0.7840 will certainly lead to a stronger upward move towards 0.7870 and 0.7920. But if the quote returns below 0.7780, AUD/USD will collapse to 0.7730 and 0.7690.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jakub Novak,
Analytical expert
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