For the last 10 days or so, rising German bund yileds (and narrowing differentials between peripheral EZ countries and the German benchmark) have been fueling gains in EUR/USD.
Since that time, the ECB has taken a more hawkish tone toward inflation while jitters over European sovereign debt have subsided to a degree. German economic data has continued to impress of late as well, including today’s Ifo survey.
As Investors regain confidence in riskier credits they move out of the benchmark bund, the safest of safe-havens in Europe, and back into Spain, Portugal, etc. Thus German yields rise and the euro benefits.
EUR/USD is closing in on session highs ahead of 1.3575 expiries this morning at 15:00 GMT. Fibo resistance is near-by at 1.3570.
