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  • Italy-Germany yield differential hits a four-week low.
  • The 10-year yield differential risks bigger losses below 287 basis points.

Italy’s willingness to amend the budget is being well received by the bond markets.

The spread between the 10-year Italian government bond yield and its German counterpart fell to 287 points – the lowest level since Nov. 2.

Notably, the spread could drop further to 250 basis points, if the double top neckline support at 287 basis points is convincingly scaled. The breakdown, if confirmed, will likely bolster the already bullish technical setup in the EUR/USD.