Euro Ends Last Week of March with a Bang as US Yield Inverts

The financial markets recorded some notable developments last week, as the euro experienced a roller coaster weekly session.

Firstly, the US bond yield curve became inverted for the first time in three years. The US yields, including the two-year yield and the 10-year yield, were some of the most talked-about topics in the market last week. While the current yield levels warrant no panic in the market, a steeper decline inversion could dictate the near-term risk appetite in the markets.

Euro Retains Bullish Outlook Despite Retrace

Meanwhile, the euro closed the week as one of the best performers in the forex market as it tried to extend its near-term rebound. Unfortunately for the single currency, momentum ran out before it could extend a leg up. Nonetheless, the euro retains some bullish outlook and could build on its momentum this week.

On the other hand, the Japanese yen ended the week as one of the worst performers but retained its price level against the euro after the European currency’s retrace. However, the yen could receive some support from the falling US yields if it extends its losses this week.

In other news, the Swiss Franc and the US dollar came in at second and third positions, respectively, as best performers last week. Meanwhile, Sterling and Kiwi were among the worst performers alongside the yen last week.

While fears from the Russia-Ukraine crisis have faded significantly, developments around this event will continue to hold significant sway on the forex market in the meantime.

Members of the Bank of England (BoE) and European Central Bank (ECB) have mentioned that the current market risks are tied to two factors, including higher inflation and low economic growth. While stagflation seems like a faraway concept at this time, prolonged sustenance of the Russian invasion of Ukraine could bring it closer.