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EUR/USD around 10-DMA, focus back on yield spread?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 19, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - The EUR/USD pair is trading around its 10-DMA located at 1.1342 with the benchmark 10-year US-German bond yield spread gaining importance ahead of Thursday’s ECB meeting.

    EUR to track the yield spread?

    The ECB is widely expected to provide a hint at a possible extension/expansion of its QE program and/or a cut in the deposit rate. The speculation has been on the rise since last week due to which the German benchmark yields fell to two-week lows on Friday.

    Heading into Thursday’s ECB meet, the yield spread may take centre stage as it would indicate whether markets expect ECB to do more or stay put. Apart from the bond yield spread, the broader market sentiment could influence the pair as well.

    The US-German 10-year bond yield spread currently stands at 148 basis points.

    EUR/USD Technical Levels

    The immediate resistance is seen at the daily high of 1.1380, above which the pair could target 1.14 followed by 1.1460 (Sep 18 high). On the other side, support is seen at 1.1343 (10-DMA) and 1.13 levels. A break below 1.13 would expose 1.1351 (50-DMA).
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