The moves in German bunds still have a clear and positive impact on the euro. Benchmark 10 year bonds from Europe’s largest economy hit 1%, the highest since September 2010.
This makes the common currency more attractive. Together with the sell-off in the greenback, partly related to the strengthening yen, EUR/USD is hitting familiar resistance.
What’s going on?
Higher yields make the euro more attractive. In addition, some of the investors that piled into bonds hedged their investment with euro shorts, and these are now unwound.
No, this is not related to Greece: the negotiations between the debt-stricken country and its creditors have not seen any progress.
And it isn’t US related either: the latest figures from the US were actually quite positive: JOLTs hit the highest level ever and last week’s all important NFP was excellent no matter how you look at it.
EUR/USD levels
Resistance remains at 1.1373 – this was resistance back in November 2003 and also last week.
Further resistance awaits only at 1.1450 – the high of the correction so far. Above this critical level, we have the round 1.15 and 1.16. On the downside, 1.1340 provides minor support, and it is followed by 1.1290.
The pair is now forming a double top as the hourly chart shows:
In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.
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