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Germany had a bond auction for 6 billion euros of bonds expiring at January 2022 – a ten year bond auction. It received bids of only 3.9 billion euros – more than a third wasn’t covered. The yield was 1.98%. The bond rout reached the core of the core!

In addition, Industrial New Orders plunged by 6.4%, much worse than a drop of 2.4% that was predicted. EUR/USD finally broke below the range. These were the straws that broke the back of the camel.

The pair dropped below 1.3420 and is now free falling, reaching 1.3380 before stabilizing. Update: 1.3380 has been breached and the pair continues lower.

Further support is at 1.3360, followed by 1.3250. Resistance is now at 1.3420, which was the bottom border of the 1.3420 – 1.3550 range that characterized the pair’s trading for many days.

For more on EUR/USD, see the euro/dollar forecast.

This was bound to reach the core of the core. Signs that Asians were shying away from bunds began last week and is now clearly visible.

The yield is still low, Germany is still a benchmark, and the euro remained relatively strong, but as mentioned last week, when the bond rout will reach Germany, the euro will fall.

Well, it happened. What do you think?