The EUR/USD closed at 1.1903 after placing a high of 1.1939 and a low of 1.1874. EUR/USD extended its losses for the second straight day on Friday and reached its 7-day lowest level amid the US dollar’s strength. The latest news that the US Federal Reserve will not extend the pandemic-era supplementary leverage ratio (SLR) rules at the end of the month when they are set to expire prompted a decline in the prices of EUR/USD pair. These rules had allowed the banks to hold the US treasuries and deposits on their balance sheets exempt from normal capital ratio requirements. Fed decided this ruling in the early stages of the coronavirus crisis to stop excessive selling pressure in the US treasury market.

The SLR practices will terminate at the end of March. The Fed has announced not to extend it further, which means the banks at Wall Street will either have to reduce their holdings of treasuries or raise additional capital hold against these treasury holdings. On the other hand, the banks were expecting the extension. The US Fed’s announcement came unexpectedly, resulting in a sharp rise in yields that eventually supported the US dollar. Hence, the EUR/USD pair came under pressure.

Furthermore, Fed Chair Jerome Powell also released an article that failed to significantly impact the financial markets as it lacked any new information on the policy. Rather, the Fed Chair repeated the information that has happened in the last 12 months in the US economy and the global economy regarding the pandemic and Fed’s responses over it.

As a result, the European Commission president Ursula von der Leyen floated the idea of tougher controls on EU vaccine exports to vaccine-producing countries. This move was aimed at London specifically as Ursula said that the EU had left with an option to ban a planned export as a message to AstraZeneca that it must fulfill its contract with Europe first before starting delivering to other countries.In response to this, the PM of Britain, Boris Johnson, urged the EU national capitals this week to veto a suggestion to block AstraZeneca vaccine export to the UK as it would send the UK-EU relationship to a new low. These tensions also kept the single currency Euro under pressure and added to the losses of the EUR/USD pair on Friday. Moreover, the third wave of coronavirus in the European countries forced Poland, France, and Ukraine to introduce fresh partial lockdown restrictions. The restrictions will take effect from Saturday as most shops will be closed, and people will be forced to work from home. These newly imposed restrictions also weighed on the single currency and added losses in the pair, and dragged it below 1.1900 level.

On the data front, there was no macroeconomic data to be released from the US side. However, from Europe, at 12:00 GMT, the German Purchasing Price Index for February declined to 0.7% against the forecast 0.8% and weighed on the single currency Euro and added further losses in EUR/USD.