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UST Yields Drive USD Higher Again

EUR
MNI (London)
  • Wednesday's recovery extension faltered at $1.2223( off YTD low of $1.2132 Jan11) in early Europe trade. The failure to push above the Jan11 high of $1.2230 saw spec longs pare back positions taking rate to $1.2161 into NY.
  • Recovery efforts were capped at $1.2181 before rate was shoved down to$1.2140 in reaction to further taper talk from Fed officials, both Clarida and Brainard suggested a sustained inflation rate above 2.0% could favour tapering/rate hike.
  • EUR/USD did recover to $1.2175 then settled around $1.2155 into the close.
  • Rate nudged to $1.2172 in opening Asian trade but was knocked back to $1.2136 as market reacted to a CNN report suggesting President elect Biden is set to unveil a COVID-19 relief package of around $2tln.Biden due to speak at 1915ET/0015GMT
  • Inflation effects of the expected package could produce that 2.0% sooner than expected which in turn lifted UST yields.
  • Rate managed to recover back to the $1.2155 level into Europe.
  • Support remains into $1.2130, a break of $1.2127(76.4% 1.2059-1.2349) to expose the Dec09 low at $1.2059. Interim support $1.2100. Resistance $1.2180, $1.2200, $1.2220/30
  • ECB December meeting minutes 1230GMT. ECB de Cos speaks at 1600GMT
  • US Weekly Jobless Claims at 1330GMT with more Fed speak from Rosengren 1400GMT(non-voter, hawk), Bostic 1600GMT, Powell 1730GMT(dove), Kaplan 1800GMT (non-voter)
  • MNI Techs: EURUSD is consolidating but remains vulnerable. Recent move lower signals start of a correction allowing a recent overbought condition to unwind. Price action has this week traded through the 20-day EMA and exposes support at 1.2130, the Dec 21 low. Break would open the 50-day EMA at 1.2093. Note too that current consolidation appears to be a bear flag, reinforcing bearish conditions. 1.2230 marks initial resistance.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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