US Treasury’s expanded bond buyback plan and Middle East tensions add volatility ahead of key inflation figures.
The EUR/USD pair remains steady near 1.1675 in early Asian trading, supported by expectations of a weaker USD. The US Treasury’s decision to expand its long-term bond buyback program beyond $4 billion may pressure the dollar, though escalating Middle East tensions could counter this effect with safe-haven flows.
Traders are focused on Wednesday’s US Personal Consumption Expenditures Price Index data, a key inflation gauge. The Treasury’s plan to tap its $1 trillion General Account for buybacks, rather than issuing short-term bills, has drawn scrutiny over long-term debt sustainability. Analysts warn that lower long-term yields could heighten sensitivity to Fed policy shifts.
Yield spreads have bolstered the euro, though strategists see limited upside. Geopolitical risks, including US threats of sanctions on Iran and Tehran’s vow of retaliation, add uncertainty to market sentiment.