EUR/USD rises as European yields plunge ahead of ECB meeting
European government bond yields experienced a sharp decline on Monday, with German 10-year yields falling 6.3 basis points to 2.615% and Spanish yields dropping 16.9 basis points to 3.217%. This broad-based yield compression has supported EUR/USD, which gained 0.2% to trade near 1.0880. The move comes ahead of Thursday's ECB policy meeting where officials are expected to maintain current rates after implementing eight consecutive cuts. Markets are pricing in cautious ECB positioning amid ongoing EU-US tariff negotiations and persistently low inflation readings below the 2% target. France and Italy also saw significant yield declines of 9.0 and 8.0 basis points respectively. Technical indicators suggest EUR/USD faces resistance at 1.0900, with support established at 1.0850. Traders await Thursday's eurozone flash PMI data alongside the ECB decision for further directional catalysts.
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