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15 May 2015
EUR and German yields may have found near term high – RBS
FXStreet (Barcelona) - Greg Gibbs, FX Trading Strategist at RBS, views that 0.777% is acting as a resistance for the 10-yr bunds, and the German yields might have found a near-term high.
Key Quotes
“The EUR has risen above the recent peak made last week, again trading into the consolidation zone made in February after the 22-Jan ECB QE announcement, and exhibiting a rising trend, perhaps at the top of a rising channel at the moment that could tend to control its rise.”
“The recent upswing in EUR appears to have been related to the rise in German bond yields. They resumed their rise this week, consistent with the rise in EUR. Overnight, 10 year bund yields revisited their spike high made in the middle of last week, and retreated. As such, this is acting as a resistance level (0.777%). The EUR touched its resistance level of 1.1450 at the same time. Yields and the EUR retreated over the second half of the session.”
“Perhaps yields in Germany have reached their high for the time being, if not for quite some time. In a speech in the US overnight, ECB President Draghi is reported to have said that the bank plans to implement its QE program (60bn purchases per month until Sep-2016) “in full” and “in any case” until inflation has recovered lastingly (Bloomberg news). This might begin to restore support for European bond markets.”
Key Quotes
“The EUR has risen above the recent peak made last week, again trading into the consolidation zone made in February after the 22-Jan ECB QE announcement, and exhibiting a rising trend, perhaps at the top of a rising channel at the moment that could tend to control its rise.”
“The recent upswing in EUR appears to have been related to the rise in German bond yields. They resumed their rise this week, consistent with the rise in EUR. Overnight, 10 year bund yields revisited their spike high made in the middle of last week, and retreated. As such, this is acting as a resistance level (0.777%). The EUR touched its resistance level of 1.1450 at the same time. Yields and the EUR retreated over the second half of the session.”
“Perhaps yields in Germany have reached their high for the time being, if not for quite some time. In a speech in the US overnight, ECB President Draghi is reported to have said that the bank plans to implement its QE program (60bn purchases per month until Sep-2016) “in full” and “in any case” until inflation has recovered lastingly (Bloomberg news). This might begin to restore support for European bond markets.”