EUR/USD Falls Toward 1.1300 as US Dollar Strengthens Amid Bond Market Rally

EUR/USD Falls Toward 1.1300 as US Dollar Strengthens Amid Bond Market Optimism

The EUR/USD currency pair declined toward the 1.1300 level during Wednesday’s Asian session, extending losses for the second consecutive day. The US Dollar found support amid a rally in global bond markets, driven by softer US Treasury yields following Japan's indication of potential cuts in government debt issuance.

As of writing, the US 10-year and 30-year Treasury yields stood at 4.46% and 4.97%, respectively. This decline in yields helped lift demand for the US Dollar, which also benefitted from stronger-than-expected US economic data. The Conference Board’s Consumer Confidence Index rose sharply to 98.0 in May from a prior 86.0, signaling improved sentiment among American consumers.

In addition, US Durable Goods Orders fell 6.3% in April, a smaller decline than anticipated, adding some stability to economic expectations. However, market participants remain cautious as they await the release of the Federal Open Market Committee (FOMC) meeting minutes later on Wednesday for clues on future monetary policy.

Federal Reserve officials continue to emphasize the importance of anchoring inflation expectations. New York Fed President John Williams highlighted the risks of persistent inflation becoming entrenched, while Minneapolis Fed President Neel Kashkari stressed caution against adjusting interest rates prematurely before understanding tariff impacts on inflation.

Meanwhile, trade relations between the United States and the European Union showed signs of improvement, with EU efforts to accelerate trade deal finalization and US President Donald Trump expressing satisfaction with the progress. These positive developments, however, have not been enough to offset the US Dollar’s strength in the current environment.

Overall, the EUR/USD pair remains sensitive to shifts in bond yields, economic data, and Fed signals, with traders closely monitoring these factors for guidance on the currency’s near-term trajectory.