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EUR/USD Fails to Recover Despite 10-Year German Bond Yields Turning Positive

EUR/USD Fails to Recover Despite 10-Year German Bond Yields Turning Positive

Nick Cawley, Senior Strategist


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EUR/USD Price, Chart, and Analysis

  • The German 10-year Bund now offers a positive yield.
  • EUR/USD is unable to shake off US dollar strength.
  • Retail traders continue to build net-long EUR/USD positions.

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The yield on the 10-year German Bund has turned positive for the first time in nearly three years as bond vigilantes continue to re-price government debt against a background of global monetary policy tightening. The yield on the German 10-year benchmark has been kept in negative territory by ongoing bond-buying via the ECB’s Asset Purchase Program (APP), part of a non-standard monetary policy measure that began in mid-2014 to ensure price stability. The latest move higher in yields/lower in price is in part due to the effect of surging US Treasury yields pulling other government bond yields higher. The US Treasury 10-year benchmark currently yields 1.90%, close to a fresh two-year high.

Euro Breaking News: EUR/USD Dismisses Surprise ZEW Economic Sentiment Index Beat

German 10-Year Yield Monthly Chart, January 19, 2022

The Euro continues to make any significant headway against the US dollar despite the pair posting a set of short-term higher lows from late March. On the daily chart, a basic bearish flag pattern continues to play out, suggesting a larger move lower is likely in the coming weeks. Any move lower will take time to play out due to a congested zone of recent prior lows all the way back down to 1.1185, while the CCI indicator is showing the pair nearing oversold territory.

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EUR/USD Daily Price Chart January 19, 2022

Retail trader data show 65.29% of traders are net-long with the ratio of traders long to short at 1.88 to 1. The number of traders net-long is 16.66% higher than yesterday and 26.18% higher from last week, while the number of traders net-short is 22.42% lower than yesterday and 34.36% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bearish contrarian trading bias.

EUR/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% 5% 1%
Weekly -11% 18% -3%
What does it mean for price action?
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What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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