A big ooops moment on the EUR/USD last week.

The Bet

Last week I made a bet that yesterday the EUR/USD would close between 1.0809 and 1.0931. The currency pair is at 1.1359 according to data from x-rates.com. I took it as a lesson that you have to analyze and incorporate policy news events into your predictions and go lateral, meaning taking in as much sideline information as possible.

The Trump Dump

Not only were Donald Trump’s back and forth on tariffs a news hogging event, but potential impacts on spending and interest rates needed to be properly accounted for. A bet should not rely solely on currency movements that occurred in the recent past. But who would have thought that as weak as Europe allegedly is that the euro would be thought of as a flight to safety.

But Europe may be attractive in the short run because of hype behind its signal that it is willing to beef up spending on its defense. But right now, it may have more to do with the US dithering on tariff policy. From a bond yield perspective, I don’t see the attraction. Europe’s go-to standard, the 10-year German bund, has a yield sitting at 2.580%, according to data from Reuters. The U.S. 10-year is at 4.497%.

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Oh, Britannia

I make honorable mention to the U.K.’s 10-year yield. Its gilts are yielding 4.716% at the time of this writing.

Alton Drew

12 April 2025