Tensions are worsen in the European bond markets. The Greek-German spread has widened back out to 800 bp, the widest in several weeks. Spain, Portugal and Italian spreads are wider too. Irish 10-year bond yields have risen 42 bp this week are up a single basis point today. German bonds recovered from initial losses sparked by the best GDP in 20-years (2.2% quarter-over-quarter) with stocks coming off, tensions rising and the euro reversal. US Treasuries remain well bid, including the 30-year bond, with yields 2-3 bp lower.
Europe's financial challenges have not been resolved, despite the euro’s recent recovery. Its bluff is more likely to be called in a weak growth and low risk tolerance environment.
The US now experiencing slower growth than in Q4 09 and Q1 10
The “equilibrium” rate for the euro-dollar exchange rate, WHICH IS OF EVERY BODY ' GUESS, while probably a bit higher now than it was six months ago, may still be below prevailing levels.
Daily Chart
H4 Chart
H1 Chart
TECHNICAL analysis
On Daily chart, the current bearish sentiments may retest the bottom trend line near 1.2730,. which if being broken, it may send the currency pair toward the 1.2600 (50% Fibo) , follows by 1.2440 (38.2% Fibo)
On the daily chart with Ichimoku, we note that the immediate support is near 1.2615, being the Ichimoku cloud's Top, follows by the next support at the Ichimoku cloud bottom near 1.2350-1.2360.
However, we do note that on H1, H4, Daily Charts, there is a significant loss of Downward momentum from the MACD/RSI/STOCHASTIC,, Signalling that further downside drift may be limited.
On the Up side, on H1, successful lifting of the PA above the Tenkan-sen near 1.2773 , and Kijun-sen NEAR 1.2815 (It is also near the 50% Fibo) shall expose this currency pair retesting the 1.2845 , being the Ichimoku cloud's bottom resistance and close to its daily pivot line. Technically, 1.3000 can be a very strong resistance .
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