A divergence in the global bond market is weighing on the euro and has tipped it below the post-ECB low. EUR/USD is down 75 pips to 1.0653.
The bond market tells the story with US 10-year yields up 3.6 bps to a session high of 4.28% while bund yields are down 4 bps and Italian BTPs are down 8.6 bps. The message from the market is that the ECB’s rate hike will tame inflation and it raises the odds of a recession, which would mean faster rate cuts later.
Technically, the June low of 1.0635 is the next important support level.
EURUSD 1 day