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EURUSD Low to be Retested as US Treasury Yields Jump

EURUSD Low to be Retested as US Treasury Yields Jump

Nick Cawley, Strategist

USD Talking Points

- US 10-year Treasury yield back above 3%.

- EURUSD could retest the May 9 low.

Check out our new Trading Guides: they’re free and have been updated for the second quarter of 2018.

Check out the IG Client Sentiment data to see how traders are positioned in EURUSD and a wide range of other currencies, indices and commodities.

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)

EURUSD Low to be Retested as US Treasury Yields Jump

Would you like to know the Number One Mistake Traders Make? – Download our free guide to find out.

If you have questions or comments on this article, you can leave them in the section below, or you can contact the author via email at Nicholas.cawley@ig.com or via Twitter @nickcawley1.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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