Yields are tumbling as the year kicks off with both Spanish and Italian 10 year yields falling below 4%. Spain is down 15 points to 3.99% while Italy is down just under 14 bps to 3.98%. Portugal is down 28 bps to 5.85% and close to the late Nov/early Dec lows at 5.83%
Portuguese 10’s 02 01 2014
The fall in yields should be a good sign for the euro but it continues to slide and has now run the buyers at 1.3685 and hit some stops down to 1.3669.
Worryingly for euro bulls is the fact we’ve broken through the bottom of a short term channel at 1.3689 that has been in place since late October.
EUR/USD h4 chart 02 01 2014
The break could see it become minor resistance on a move back up. Further support will be at the 24 Dec low at 1.3653 then the 200 h4ma at 1.3634 and the 55 dma & 20 Dec low around 1.3624.
