USD Talking Points
- US 10-year Treasury yield back above 3%.
- EURUSD could retest the May 9 low.
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USD Gets a Boost from Rising UST Yields Ahead of US Retail Sales.
Rising US Treasury yields are giving the greenback a boost on Tuesday morning with multi-year yield highs being printed. While the headline 10-year now yields 3.02%, the 7-year is just about to breach the 3.0% yield barrier for the first time since May 2010. And in the short-end of the market the US 2-year is quoted at 2.55%, over 3 percentage points higher than the German 2-year which currently changes hands at -0.55%. This yield differential is feeding into EURUSD, weakening the single currency.
Ahead, the provisional Euro-Zone GDP reading - expected at 0.4% q/q and 2.5% y/y may surprise to the downside after German GDP came in weaker than expected earlier this morning at 0.3% q/q (expected 0.4%) and 1.6% y/y (1.7% expected). And later in the day, US Retail Sales may give the greenback an additional boost if lowly expectations of 0.3% m/m are beaten to the upside.
EURUSD currently trades at 1.19350, just above the January 9 swing low at 1.19155. Below here, the May 9 low at 1.18227 and the December 12 swing low at 1.17175. On the upside, the 200-day moving average at 1.20560 should prove a tough level to break in the short-term.
EURUSD Daily Price Chart (March 5, 2017 – May 15, 2018)
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--- Written by Nick Cawley, Analyst