Once European markets closed yesterday, Treasury yields started to move higher again. The Richmond Fed index was strong, but I’m not sure that’s really the driver. The only data today comes from New Home Sales, likely to be stronger too.
The Treasury sell-off contrasts with the inevitable bid for Bunds in the wake of the terror attacks yesterday and as the Treasury/Bund spread widens to its highest levels of the year, the divergence from EUR/USD becomes more marked. At the very least, this will cap the Euro; perhaps it will be a catalyst for yet another move into the bottom half of the 1.07-1.14 range.
I’m (regularly) tempted to buy USD/JPY and sell EUR/USD but neither is threatening to break out of ranges so there’s no rush.
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