As the EURUSD moves lower on a tilt to less hawkish ECB, the German 10 year yield is also moving to the downside. The yield is currently at 2.01%. That's down around 11 basis points on the day. The yield reached as high as 2.532% last Friday.
Looking at the 4-hour chart above, the yield has moved steadily lower today, and in the process has also breached the 100 bar MA (blue line) currently at 2.143%. Note that on October 4, the dip found support near that MA and bounced higher.
Stay below the 100 bar MA, would keeps the downward bias going forward.
The next target would look toward 1.926%, followed by the 38.2% retracement of the move up from the August 2 low. That level comes in at 1.829%. The rising 200 bar moving averages near the swing low from October 4 at 1.780%
Meanwhile, the EURUSD currently trades above and below the parity level after testing its 100 day moving average earlier in the Asian session near 1.0088 (the high price reached 1.0092).
The low price today has reached 0.99715. On the downside, the 50% retracement of the move down from the August the swing high comes in at 0.99515. That level is also the swing low going back to July 14. Move below that level would increase the bearish bias for the EURUSD.
Of note today from a option perspective is there are $2.4 billion of options expiring at the parity level. That may keep the price near the level into the expiry. That could lead to a steady market near the parity level if the option sellers to exert their might. Option sellers want the price to expire at the strike price to maximize the gain on their position.
In contrast if the buyers want to push, they could squeeze and force the option sellers to hedge their position. So it is somewhat of a double-edged sword depending upon who takes more control.
