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The ECB’s March meeting will likely dominate trading in the FX market on Thursday, with investors bracing for comments on the recent increase in global bond yields.

The common currency sank to its weakest position since late-November on Monday as rising Treasury yields caused investors to once again favour the US dollar.

The dollar continued to rally versus its peers last week as US Treasury markets once again sold off. All eyes now shift to this Thursday’s European Central Bank meeting.

The US dollar and euro outperformed most other currencies last week as spooked bond investors sent Treasury yields sharply higher.

Last week saw a general continuation in the themes we’ve seen in the FX market since the start of 2021, with risk assets and commodity currencies largely outperforming.

A strong set of US retail sales figures buoyed the dollar against most major currencies on Wednesday.

A jump in US Treasury yields helped support the US dollar on Tuesday. The euro continued to underperform as the EU’s vaccine programme makes sluggish progress.

The US dollar fell across the board last week following some dovish comments from Fed Chair Powell and continued impressive signs of progress towards mass vaccinations.

Risk currencies continued to rally against the safe-havens on Wednesday morning, with investors in an optimistic mood over the global outlook.

The dollar fell against its major peers on Tuesday morning as investors focused on the growing possibility of more US fiscal stimulus. Sterling continued to power ahead on the UK’s rapid vaccine progress.