EUR/USD on solid ground as US Y-yield curve hits fresh 10.5-year low

US Treasury yield curve flattens/drops to lowest since October 2007, could hurt the USD.
Focus on the German Zew survey and US-German 10-year yield spread.

The EUR/USD pair rose to 1.2395 on Monday as the spread between the US 10-year treasury yield and the 2-year treasury yield narrowed to 45.5 basis points - the lowest level since October 2007.

For more than a year, the relentless flattening of the yield curve has hurt the greenback. Also, he Dec20-Mar21 Eurodollar spread has turned negative, meaning the market expects the US rate hike cycle to end in 2021. This is bad news for the USD bulls.

However, that does not necessarily mean the EUR/USD will rally. Moreover, the 10-year US-German yield spread continues to rise in the USD-positive manner. As of writing, the spread stands at 230.6 basis points - the highest since December 2016.

So, the EUR/USD may have tough time revisiting 1.25, unless the yield spread drops in the USD-negative manner. That said, a move above 1.24 cannot be ruled out if the German Zew survey, due at 09:00 GMT, beats estimates.

EUR/USD Technical Levels

Acceptance above 1.24 (psychological hurdle) would open up upside towards 1.2476 (March 27 high) and 1.2538 (Jan. 25 high). On the downside, breach of support at 1.2356 (5-day MA) could yield a drop to 1.2327 (50-day MA) and 1.23 (psychological support).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Expanding
1H	Bearish	Neutral	Low
4H	Bullish	Overbought	Shrinking
1D	Bullish	Neutral	Low
1W	Bullish	Neutral	Low
Updated Apr 17, 03:30 GMT

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.