30 Apr 2015
Bunds yields break key support, bullish for EUR/USD – BAML
FXStreet (Barcelona) - BofA-Merrill Lynch note that the Bund yield breakout has further to run, which would be bullish for EUR/USD, expecting gains to extend towards 1.1270/1.1534 area.
Key Quotes
“Bund yields have broken significant long-term support today, taking out the 50d (now 21.2bps) for the first time since Jan'14, as well as 11m channel support at 21.3bps.”
“These breaks, coupled with the impulsive rise from the 4.7bps, Apr-17 lows, points to a medium-term turn in trend, targeting 38bps (1Q15 pivot), with the potential for a push to the 200d, at 63bps, before greater signs of a yield top emerge. Pullbacks should be limited to the 50d (now 21.2bps).”
“This is bullish for €/$. Indeed, the break of 1.1053/1.1120 (Mar-26 high and 6wk channel resistance) points to a deeper correction than previously anticipated. Look for gains to continue into 1.1270/1.1534 area resistance before renewed topping and a resumption of the long-term bear trend.”
Key Quotes
“Bund yields have broken significant long-term support today, taking out the 50d (now 21.2bps) for the first time since Jan'14, as well as 11m channel support at 21.3bps.”
“These breaks, coupled with the impulsive rise from the 4.7bps, Apr-17 lows, points to a medium-term turn in trend, targeting 38bps (1Q15 pivot), with the potential for a push to the 200d, at 63bps, before greater signs of a yield top emerge. Pullbacks should be limited to the 50d (now 21.2bps).”
“This is bullish for €/$. Indeed, the break of 1.1053/1.1120 (Mar-26 high and 6wk channel resistance) points to a deeper correction than previously anticipated. Look for gains to continue into 1.1270/1.1534 area resistance before renewed topping and a resumption of the long-term bear trend.”