US 10 year yield moves toward key support area

Technical Analysis

Author: Greg Michalowski | 10-year

200 day MA support/low from April converge 

The US 10 year note yield is trading at the low level for the day. The  yield is down to 2.2081%, down 3.8 bps. The high yield reached 2.2465%. The high yield in May reached 2.4210%.


Technically, that high yield was very close to the 100 day MA (blue line in the chart above).  Yield sellers (bond buyers) came in a put a lid on the note.  

The fall took the yield to a low of 2.1791% which was just above the April low yield of 2.1629%.  

In addition to the lows in April and May, the 200 day MA (green line in the chart) has caught up to the price action. It is currently at 2.1625% and moving higher.  

So the yield is moving closer to the next key MA level. The yield has not closed below that MA level since back in October 2016 (on the US Election day in November, the market bounced the yield off that MA level). 

Do bond sellers, start to look to enter against the risk defining level on a further dip?  I would look for traders to lean against the area as risk can be defined and limited. However, on a break below, look for the market sentiment to take the yield lower. We might even look toward the 2.00% level which is close to the 50% of the  move up up the July 2016 low. 

What is the impact in the currency markets?

Generally speaking the USDJPY has been following yields.  SO if the yields should break lower, look for the USDJPY to likewise look to move lower too.  


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